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New Straits Times

Hektar REIT charts pivot beyond retail

KUALA LUMPUR: Hektar Real Estate Investment Trust (Hektar REIT) is charting a bold pivot beyond malls, eyeing high-growth sectors including education, digital infrastructure, industrial assets and potentially renewable energy concessions. Executive director and chief executive officer Zainal Iskandar Ismail said the shift in strategy has already been presented to shareholders. "Of course, moving from 100 per cent retail to new diversification takes time. We have all the deals pipelined in place and we are in the position to choose. "At the same time, I think we are also looking at whatever asset that we have now, we will try to maximise the return in terms of capital valuation and also in enhancement," he said at a press conference today. Zainal said that Hektar is evolving into a different entity moving forward, especially after witnessing how the retail sector was impacted by the Covid-19 pandemic. "With all this trade war between America and China, you are going to see a potential setback in terms of growth. So retail will be affected. "I think moving forward, we are looking at other high growth areas," he added. When asked about the type of digital assets Hektar REIT plans to acquire, Zainal said an official announcement will be made at the appropriate time. He noted that any shift in focus must be backed by the strength of diversification. "In our case, we've been in the retail business since our inception in 2006, so any move must complement and strengthen our core business. "To diversify into something, you must have a new model that actually complements or strengthens your current business model," he said. Zainal said the REIT is aiming to acquire assets that can substantially extend its weighted average lease expiry (WALE). The goal, he added, is to push that figure beyond 10 years, a target achievable only through select asset classes that offer such long-term tenures. "Similarly, digital assets are another area we believe hold strong potential. Unlike malls, where you are limited by net lettable area, digital infrastructure, such as data centers, offers tremendous scalability. It's all about data and traffic, and the revenue model is quite different. "To me, I think moving forward, in order for us to prepare Hektar to become a foolproof REIT with a longer term of expiry, with a secure cash flow in order to offer a better yield, we need to consider this kind of alternative asset class," he added.