Prosperity REIT FY11 Results Announcement
- Total DPU Grows 9.2% Year-on-Year
- Distribution yield at 8.0%1
- Continued to benefit from stable finance cost and increased asset value
- Solid asset performance
Hong Kong, 20 March 2012 – Prosperity Real Estate Investment Trust (“Prosperity REIT”) [Stock Code: 0808] today announced its final results for the year ended 31 December 2011 (the "Reporting Year")")
Attractive distribution and distribution yield
Prosperity REIT delivered solid results in 2011. Revenue and income available for distribution grew by 2.0% and 10.6% respectively year-on-year (“YoY”). Correspondingly, total distribution per unit to unitholders increased by 9.2%. These outstanding achievements were attributable to the management’s astute policies which led to a significant reduction in finance costs and a strong rental reversion rate.
The REIT Manager is pleased to announce that our unitholders will receive a total distribution of HK$0.1202 per unit for the Reporting Year. This represents a distribution yield of 8.0%¹ per unit.
Continued to benefit from stable finance cost and increased asset value
Prosperity REIT continued to benefit from stable financing costs achieved by the term loan and revolving credit facility agreements that it entered into in 2010 when interest rates were relatively low. Our management’s unwavering commitment to the unitholders has paid off with a healthy cost-to-revenue ratio and a gearing ratio of 23.3% and 25.6% respectively.
During the Reporting Year, as a result of our strong business fundamentals, the value of Prosperity REIT’s assets reached a record high after a YoY increase of approximately 17.8%. Net asset value per unit also surged to HK$3.29.
Solid asset performance
As at 31 December 2011, Prosperity REIT’s portfolio occupancy rate remained stable at 98.8%, while the average effective unit rent of the portfolio increased considerably from HK$14.67 per sq. ft. to HK$15.05 per sq. ft. Our management’s proactive leasing approach and effective tenant recruitment strategies enabled us to increase our tenant retention rate to 66.9% during the Reporting Year, which is the highest since 2006. Our rental reversion rate also increased to 14.8%.
Revenue and net property income
During the Reporting Year, revenue improved to HK$275.6 million, being HK$5.5 million or 2.0% higher than that of 2010. The revenue comprised HK$232.5 million of rental and car park income, plus HK$43.1 million of rental related income.
The net property income for the Reporting Year was HK$211.5 million, 0.5% lower than last year. The decrease was mainly due to the impact brought forward from the negative rental reversion in 2010, together with higher cost as a result of the larger expiry profile in 2011 and the statutory minimum wage enforced.
Benefiting from strategic locations
Prosperity REIT is benefiting from the strategic locations of our properties. The Hong Kong SAR Government announced its plan to redevelop the area around the former Kai Tak Airport in Kowloon East into a core business and commercial district. We are well positioned to leverage the anticipated increase in property prices and rental incomes in the district.
Looking ahead, we expect the Hong Kong and global economy to continue to experience the fallout from market uncertainty. However, Asia’s stable fundamentals are likely to cushion this economic pressure to a certain extent.
Prosperity REIT is managed by a team of experienced asset management professionals of high calibre and, since its listing in 2005, has a long-term track record of delivering a stable distribution to our unitholders. We are cautiously optimistic that we will continue to deliver positive results in 2012.
We will not allow ourselves to become complacent. To generate greater value for both our tenants and our unitholders, we will continue to maintain a prudent approach in all our operations, while pushing ahead with our ongoing property enhancement programmes.
About Prosperity REIT
Prosperity REIT (Stock Code: 808) is a Hong Kong collective investment scheme authorized under section 104 of the Securities and Futures Ordinance (Chapter 571 of Laws of Hong Kong). Prosperity REIT owns a diverse portfolio of seven commercial properties in the decentralized business districts of Hong Kong, comprising all, or a portion of, three Grade A office buildings, three industrial/office buildings, and one industrial building. The total gross rentable area is 1,215,579 sq. ft.
About ARA Asset Management (Prosperity) Limited, the REIT Manager
Prosperity REIT is managed by ARA Asset Management (Prosperity) Limited, a wholly-owned subsidiary of ARA Asset Management Limited, which is listed on the Main Board of the Singapore Exchange Securities Trading Limited.
The information contained in this press release does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase or subscribe for units in Prosperity REIT in Hong Kong or any other jurisdiction.
Media and investor contacts
Tel: (852) 3605 9136
Fax: (852) 2169 0968
Assistant Finance Manager
Tel: (852) 3605 9211
Fax: (852) 2169 0968
1 Based on Prosperity REIT’s closing unit price of HK$1.50 as at 30 December 2011.