Prosperity REIT 2013 Interim Results Announcement
- 12.7% YoY uplift in interim DPU and 6.0%1 attractive annualized distribution yield
- Stable occupancy rate with remarkable 37.8% rental reversion rate
- Healthy financial position with contained interest rate risks
- High quality commercial tenants moved in at Prosperity Place after wholesale conversion
Hong Kong, 22 August 2013 – ARA Asset Management (Prosperity) Limited (the "REIT Manager"), as manager of Prosperity Real Estate Investment Trust ("Prosperity REIT") [SEHK: 808], is pleased to announce the interim results of Prosperity REIT for the six months ended 30 June 2013 (the “Reporting Period”).
Uplift in interim DPU and attractive annualized distribution yield
Prosperity REIT continued to deliver a strong set of results during the Reporting Period. Leveraging on the resilience of the decentralized commercial property market, remarkable rental reversions and stable finance costs, distributable income grew by 14.1% year-on-year (“YoY”) to HK$103.6 million.
The REIT Manager is pleased to announce an interim distribution per unit (“DPU”) of HK$0.0744 for the Reporting Period, representing a YoY increase of 12.7%, and an attractive annualized distribution yield of 6.0%1.
Stable occupancy rate with remarkable rental reversion rate
Prosperity REIT’s revenue improved by 11.9% to HK$167.1 million during the Reporting Period. The improvement was attributable to a remarkable rental reversion rate of 37.8% as well as the resilient performance of the leasing market in the decentralized districts. The cost-to-revenue ratio remained unchanged at 22.0%. Consequently, net property income rose 11.9% to HK$130.4 million.
Under the REIT Manager’s proactive leasing strategy, Prosperity REIT’s portfolio continued to demonstrate outstanding operating performance. Occupancy rate stood at a high level of 98.1% as at 30 June 2013, while the average effective unit rent recorded a solid growth of 14.3% to HK$18.54 per sq. ft..
Healthy financial position with contained interest rate risks
The property valuation of Prosperity REIT’s portfolio was HK$8,434 million, an increase of 6.1% over the December 2012 valuation. The net asset value per unit registered an uplift of 7.3% over the first half of the year to HK$4.55 as at 30 June 2013.
Interest rate risks have been contained as 80% of Prosperity REIT’s term loan has been hedged at a fixed rate until June 2015. Gearing ratio further decreased to 20.9% as at 30 June 2013 as a result of stable finance costs and the increase in property valuation.
High quality commercial tenants moved in at Prosperity Place after wholesale conversion
Following the approval by the Hong Kong SAR government to convert the use of Prosperity Place from industrial/office to commercial under the industrial buildings revitalization scheme in last December, the REIT Manager has successfully secured commercial tenants into Prosperity Place. Coupled with the continuous asset enhancement initiatives, Prosperity Place will be transformed to a premium commercial landmark in Kowloon East.
Barring unforeseen circumstances, the decentralized commercial property market in Hong Kong will continue to stay resilient in the near term, due to the persistent decentralization trend and a limited supply of new properties.
Prosperity REIT is well-poised to benefit from the resilience of the decentralized commercial property market, as well as the potentials arising from government policies, such as the industrial buildings revitalization scheme and the transformation of Kowloon East into another premier central business district. With these advantages, unitholders of Prosperity REIT can confidently expect stable and sustainable returns to continue.
1 Based on Prosperity REIT’s closing unit price of HK$2.47 as at 28 June 2013