IGB REIT cautious on business environment

IGB REIT cautious on business environment


IGB real estate investment trust (REIT), the owner of the Mid Valley Megamall and The Gardens Mall said the current sluggish economic and business conditions will result in a material adverse impact on its financial performance this year.

This is mainly due to the rental support programme and the potential increase in expected credit losses and possible impairment of fair value for its investment properties arising from the Covid-19 pandemic and resultant movement control order (MCOs).

Since the recovery MCO started on June 10, 2020, both Mid Valley Megamall and The Gardens Mall have seen an apparent, gradual, and cautious increase in footfall and vehicle traffic volume.

Notwithstanding the initial recovery indicators, the Manager of IGB REIT is monitoring the current economic and business situations closely and will take appropriate and timely actions to mitigate the impact on the REIT's operations and financial performance.

The REIT's net profit plunged 75 per cent to RM19.5 million for the second quarter ended June 30, 2020 (2Q20), from RM77.9 million recorded in the same quarter last year due to rental support provided to tenants and lower car park income arising from the Covid-19 pandemic and Movement Control Order (MCO).

Gross revenue fell 54 per cent to RM62 million compared to RM135 million a year ago.

IGB REIT recorded net property income at RM37.4 million, which was lower by 62.1 per cent compared to the corresponding quarter in 2019 of RM98.5 million.

"Despite the grim outlook and many challenges ahead, IGB REIT is determined to stay resilient throughout the Covid-19 pandemic," it said in an exchange filing to Bursa Malaysia yesterday.