Drawing close to its four years in operations, Dolmen City REIT (PSX: DCR) announced its financial performance for 9MFY19 yesterday on the stock exchange. DCR is not the only Real Estate Investment Trust listed on the stock exchange, but also the only REIT in the country operating as of now.
DCR reported a rise of 9.5 percent in its rental income on a year-on-year basis, while a decline 11 percent in marketing income resulted in overall income to be up by 8.2 percent, year-on-year. Administrative expenses remained subdued, declining by 8.4 percent, year-on-year, taking net operating income up by 11.3 percent, year-on-year.
Profit for the period that consists of income from operations and change in fair value of investment property based on the valuation conducted by independent valuator MYK Associates (Private) Limited was up by 62.2 percent year-on-year for 9MFY19. Much of the increase in the earnings came from the change in fair value of the property. While the occupancy rates for 9MFY19 are not available yet, numbers from DCR’s 1HFY19 report show that the occupancy level of the property had been stable on an overall basis at around 99 percent by the end of December 2018. Harbour Front that houses many corporate offices is fully occupied, while the tenancy pool of Dolmen Mall Clifton had largely remained the same. Remember that the REITs enjoy tax advantage, and hence Dolmen City REIT is not liable to income tax provided it meets certain conditions.
Though the country only has one REIT operating as of now, things have improved slightly. The SECP had promulgated amendments in the regulations governing REITs in December 2018 that allowed REITs to borrow. Other amendments largely pertained to developmental REITs. However, a favourable tax regime is needed to help the REIT-landscape, and the efforts to bring transparency in the sector should ideally attract investment in the sector.
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