9 Key Things To Know About UOA Real Estate Investment Trust Before You Invest

UOA Real Estate Investment Trust (UOA REIT) invests in commercial real estates that are primarily used for office purposes. UOA REIT was listed on 28 November 2005 with an initial portfolio of 3 properties valued at RM 310.5 million. Since then, it has acquired 3 additional properties, thus, enlarging its portfolio to 6 properties valued at RM 1.13 billion as at 30 September 2017.

In this article, I’ll share 9 quick facts that you need to know about UOA REIT before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: UOAREIT / KLSE: 5110
Market Capitalization: RM 680.8 Million (10 December 2017)

Share Price: RM 1.61 (10 December 2017)

Industry: Reit

Syariah Compliant: No

#2: The Business

UOA REIT derives income from 6 properties. They are:

  1. UOA Centre Parcels
    It owns 28 strata titles in a 33-storey office building known as UOA Centre located at Jalan Pinang, Kuala Lumpur. As at 30 September 2017, the property is valued at RM 85.0 million, 12.0% of UOA REIT’s net asset value. In 2016, UOA Centre Parcels had enjoyed 78.5% in occupancy rate with major tenants such as Dats Management Sdn Bhd, Bank Kerjasama Rakyat Malaysia Bhd, and Mondial Assistance Services (Malaysia) Sdn Bhd. In 2016, UOA Centre Parcels had made RM 6.32 million in rental income.

  2. UOA II Parcels
    It owns 68 strata titles in a 39-story office building known as UOA II located at Jalan Pinang, Kuala Lumpur. As at 30 September 2017, the property is valued at RM 294.0 million, 41.6% of its net asset value. In 2016, UOA II Parcels had enjoyed 90.4% in occupancy rate with main tenants such as Dats Management Sdn Bhd, Envico Enterprises Sdn Bhd, and SIP JDA Sdn Bhd. In 2016, UOA II Parcels has contributed RM 23.14 million in rental income.

  3. UOA Damansara Parcels
    It owns 30 strata titles in a 15-storey office building known as UOA Damansara located at Damansara Heights, Kuala Lumpur. As at 30 September 2017, the property is valued at RM 120.9 million, 17.1% of its net asset value. In 2016, UOA Damansara Parcels had recorded 87.9% in occupancy rate with major tenants such as Skrine, Dats Management Sdn Bhd, and Kementerian Perumahan dan Kerajaan Tempatan (Government of Malaysia). In 2016, UOA Damansara Parcels has made RM 9.84 million in rental income.

  4. Wisma UOA Pantai
    It is a 5-storey office building located at Jalan Pantai Jaya, Kuala Lumpur. As at 30 September 2017, the property is valued at RM 95.0 million, 13.5% of its net asset value. In 2016, Wisma UOA Pantai has recorded 55.7% in occupancy rate with main tenants such as Solid Waste and Public Cleansing Management Corporation, Dats Management Sdn Bhd, and Tenaga Nasional Bhd. In 2016, Wisma UOA Pantai has contributed RM 8.00 million in rental income.

  5. UOA Damansara II
    It is a 16-storey office building located in Damansara Heights, Kuala Lumpur. As at 30 September 2017, the property is valued at RM 233.2 million, 33.0% of its net asset value. In 2016, UOA Damansara II has recorded 79.5% in occupancy rate with main tenants such as Dats Management Sdn Bhd, Radimax Group Sdn Bhd and Securities Commission Malaysia. In 2016, UOA Damansara II has contributed RM 15.97 million in rental income.

  6. Parcel B – Menara UOA Bangsar
    It owns 14 strata titles in a 15-storey office building known as Menara UOA Bangsar located at Jalan Bangsar Utama 1, Kuala Lumpur. As at 30 September 2017, the property is valued at RM 300.0 million, 42.5% of its net asset value. In 2016, this property has enjoyed 97.6% in occupancy rate with main tenants such as Perbadanan Hak Intelek Malaysia, Dats Management Sdn Bhd, and Prasarana Malaysia Bhd. In 2016, this property has contributed RM 26.11 million in rental income.

#3: The Financials

UOA REIT has maintained its gross income at RM 85 – 90 million a year. With higher operating costs, UOA REIT has reported slight dip in realized earnings, down from RM 47.62 million in 2012 to RM 45.22 million in 2016. Distribution per unit (DPU) was maintained at 10 – 11 sen a year during the 5-year period.

Source: Annual Reports of UOA REIT


Source: Annual Reports of UOA REIT

#4: Major Acquisition

There is no major acquisition or disposal announced or proposed by UOA REIT.
#5: Lease Profile

There is no information revealed on UOA REIT’s lease expiry profile.
#6: Valuation

As I write, UOA REIT is trading at RM 1.61 a unit.

As at 30 September 2017, UOA REIT has reported having RM 1.67 in net asset value a unit. Thus, its current P/NAV works out to be 0.96.  

UOA REIT adopts a distribution policy to declare and pays out at least 90% of its distributable income on a half-yearly basis. For the 1st half of 2017, UOA REIT has paid out 4.18 sen in DPU.

If UOA REIT is able to maintain its DPU at 4.18 sen for the next 2 half yearly distributions, it would pay out 8.36 sen in DPU. As such, its gross dividend yield is expected to be 5.19%. For individual investors, it is prudent to deduct 10% withholding tax from 7.52 sen when calculating your net dividend yield, as such, I would expect net dividend yield to be 4.67%.

#7: Debt Profile

As at 30 September 2017, UOA REIT has recorded RM 397.3 million in total borrowings. Its debt works out to be 35.1% of UOA REIT’s total asset value of RM 1.13 billion, thus, is in line with its policy to maintain below 50% in debt-to-total assets.

#8: Investor Relations

For further enquiries or to request for additional investment information on UOA REIT’s Investors Relation matters, you may contact:

Telephone:

+603 2245 9188

Email:

uoacare@uoa.com.my

Website:

http://www.uoareit.com.my/index.php
#9: Major Shareholders

As at 31 December 2016, the substantial shareholders of UOA REIT are:

– Desa Bukit Pantai Sdn Bhd: 24.18%

– Wisma UOA Sdn Bhd: 18.38%

– Rich Accomplishment Sdn Bhd: 17.66%

– Damai Positif Sdn Bhd: 11.35%

– Employees Provident Fund Board: 5.68%

Ian Tai

Ian Tai is the founder of Bursaking.com.my, a platform that empowers retail investors to build wealth through ownership of fundamentally solid stocks. It is an essential tool that sifts out stocks that grow profits consistently from a database of over 900+ stocks listed mainly in Malaysia. As a Malaysian with close family ties in Singapore, Ian publishes a series of newsletters on how anyone can invest profitability in both countries.

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