Press Releases

2010 Final Results - Prosperity REIT delivered a satisfactory performance in 2010

2011-02-25

Hong Kong, 25 February 2011 – Prosperity Real Estate Investment Trust (“Prosperity REIT”) [SEHK: 0808] today announced its final results for the year ended 31 December 2010 (the "Reporting Year").

Prosperity REIT delivered a satisfactory performance in 2010, in spite of the lingering effects of the global financial crisis.

Total distribution per unit (“DPU”) to unitholders increased by 0.3% as revenue and net property income improved by 2.5% and 2.7% respectively, year-on-year (“YoY”). Prosperity REIT’s property valuation rose by 12.9% YoY to an all-time high and the net asset value per unit grew to HK$2.70.

I am pleased to announce that our unitholders will receive a total distribution per unit of HK$0.1101 for the Reporting Year. This represents a distribution yield of 6.3% .

Operations Review

Prosperity REIT recorded steady results for the Reporting Year. In 2010, total revenue reached HK$270.1 million while net property income rose to HK$212.5 million, an increase of 2.5% and 2.7% YoY, respectively. Prosperity REIT’s overall portfolio occupancy rate continued to improve throughout the year, climbing to a record high of 99.5% as at 31 December 2010, and the average effective unit rent was HK$14.67 per sq. ft. As a result of our proactive management approach and effective tenant recruitment strategies, Prosperity REIT achieved a 64.5% tenant retention rate throughout the Reporting Year, while the cost-to-revenue ratio and gearing ratio maintained healthy rates of 21.3% and 30.1%, respectively. In line with our practice of financial prudence, we made two financial arrangements during the year. We successfully entered into new term loan and revolving credit facility agreements, totalling HK$2,200 million. We also took a prudent approach to managing the risk in fluctuation of interest rates by entering a plain vanilla swap for 80% of Prosperity REIT’s term loan. With these two arrangements in place, our finance costs will be reduced in the years to come. These actions will help to mitigate the uncertainties associated with floating interest rates and our unitholders will benefit from stable distributions.

Financial Review

Revenue - During the Reporting Year, revenue was HK$270.1 million which comprised HK$226.9 million worth of rental and car park income, plus HK$43.2 million of rental related income. Rental and car park income was HK$2.0 million, or 4.9% above that of 2009.

Net Property Income - The net property income was HK$212.5 million and the cost-to-revenue ratio was 21.3%. The REIT Manager continues to implement effective cost control measures.

Distribution - The distributable income for the six months from 1 July 2010 to 31 December 2010 is HK$73.5 million, equivalent to a DPU of HK$0.0546.

Prospects

Looking forward, we believe that Prosperity REIT will benefit from the recovering economy. As the local unemployment rate continues to fall and business improves overall, demand for office space is poised for steady growth. Prosperity REIT will continue with its prudent and proactive approach in optimizing returns, while endeavouring to provide tenants with the best service to uphold a strong tenant relationship and increase the tenant retention rate.

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 geographically 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 with a total gross rental area of about 1.22 million square feet. Prosperity REIT is managed by ARA Asset Management (Prosperity) Limited