UOA REIT Projects Stronger 4QFY24 Earnings

UOA REIT’s 4QFY24 distributional income is expected to increase by 14.3% QoQ to RM12 million, driven by improved occupancy at Menara UOA Bangsar (MUB) and reduced property operating expenses following refurbishment works. However, overall distributional income for FY24 is anticipated to decline by 20.1% YoY to RM43 million due to challenges such as office oversupply and the need for asset enhancements. The REIT is maintained at a “HOLD” rating with a TP of RM1.06/unit, reflecting limited near-term DPU growth.

UOA Segment Summaries:

1. Earnings Outlook:
   • 4QFY24 distributional income is projected at RM12 million (+14.3% QoQ), supported by higher gross rental income and lower operating expenses.
   • FY24 distributional income is expected to decline 20.1% YoY to RM43 million.
2. Occupancy Rate:
   • Occupancy at MUB is anticipated to exceed 60% in 4QFY24, up from 58% in 3QFY24.
   • A replacement anchor tenant has been secured for 85% of the previously vacant floor space, though some floors remain unleased.
3. Operating Expenses:
   • Operating expenses are expected to decline following refurbishment completions at MUB and Wisma UOA Damansara II, including chiller plant replacements.
   • Future refurbishment plans for FY25 include UOA Centre and Wisma UOA II, while optimization rather than full replacements is planned for chiller plants at UOA Damansara I and II.

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