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2009 Final Results - Prosperity REIT upheld its strong fundamentals and maintained a solid performance in 2009

2010-03-19

Hong Kong, 19 March 2010 - Prosperity Real Estate Investment Trust ("Prosperity REIT") [SEHK: 0808] today announced its final results for the year ended 31 December 2009 (the "Reporting Period").

Prosperity REIT upheld its strong fundamentals and maintained a solid performance in 2009, despite the continuing impact of the global financial crisis

Revenue grew by 0.2% year-on-year ("YoY"), whilst the net property income stabilized with a negligible drop of 0.9% YoY. Buoyed by the REIT Manager’s proactive leasing and asset enhancement initiatives, Prosperity REIT's valuation rose by 8.6% and the net asset value per unit improved to HK$ 2.34.

In view of Prosperity REIT's satisfactory financial performance during the Reporting Year, We, ARA Asset Management (Prosperity) Limited, as the manager of Prosperity REIT (the "REIT Manager"), are pleased to announce that our unitholders would be entitled to a total distribution per unit ("DPU") of HK$0.1098, which represents a distribution yield of 8.3% . The DPU dropped by 13.4% YoY mainly due to the additional cash finance cost of HK$16.3 million in the Reporting Year, as a result of the unwinding of the interest rate swap in July 2008.

Operations Review

Despite the challenging economic conditions in the first half of 2009, Prosperity REIT achieved encouraging results for the Reporting Year. In 2009, total revenue and net property income reached HK$263.6 million and HK$206.9 million respectively.

As at 31 December 2009, Prosperity REIT's portfolio occupancy was 97.4%, and the average effective unit rent of the portfolio increased by 4.5% YoY to HK$14.92 per sq. ft. .

Notwithstanding the market challenges, Prosperity REIT was successful in achieving a positive rental reversion rate of 4.3%. Moreover, Prosperity REIT was able to attain an encouraging 61.8% tenant retention rate. These are the results of Prosperity REIT's proactive management approach, management approach, effect leasing strategies and strong tenant relationships.

During the year, the management team of Prosperity REIT stepped up its efforts in creating a greener urban environment through the creation of a living green roof at Prosperity Place. This initiative is part of the REIT Manager's ongoing endeavors to add value to Prosperity REIT by transforming neglected areas into valuable assets.

Financial Review

Revenue - During the Reporting Year, revenue was HK$263.6 million. The revenue comprised of HK$222.4 million worth of rental and car park income, plus HK$41.2 million of rental related income. Rental and car park income was HK$0.6 million, or 0.2% above that of 2008.

Net Property Income - The net property income was HK$206.9 million and the cost-to-revenue ratio was 21.5%. The REIT Manager continues to implement effective cost control measures.

Distribution - The distributable income of the half year from 1 July 2009 to 31 December 2009 is HK$72.3 million, equivalent to a DPU of HK$0.0544. The interim DPU for the six months from 1 January 2009 to 30 June 2009 was HK$0.0554, and the total DPU for the Reporting Year is HK$0.1098.

Prospects

As we embark upon the start of a new decade, we believe the Asian economies are well on the way to economic recovery, with China leading the way. Nevertheless, the road to recovery is still expected to be a challenging one. Accordingly, the REIT Manager will continue to maintain a prudent and judicious approach to the management of Prosperity REIT.

With our proactive leasing initiatives, we are cautiously confident that occupancy rates will be gradually restored to the optimum pre-financial crisis levels. Through well-planned asset enhancement efforts, positive business strategies, vigilant cost controls, reinforced tenant relations and effective asset enhancements, we are committed to delivering satisfactory returns to unitholders in the coming years.

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