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2007 Annual Results - DPU increased by 8.1%

2008-03-12

HONG KONG, 12 March 2008 - Prosperity Real Estate Investment Trust ("Prosperity REIT") [SEHK: 0808] today announced its final results for the year ended 31 December 2007 ("Reporting Year").

A solid performance was delivered by Prosperity REIT in the 2007 financial year. Total DPU to unitholders increased by 8.1% as total revenue and net property income improved significantly by 12.7% and 15.1% respectively, year-on-year ("YoY"). Prosperity REIT’s property valuation rose by 7.4% YoY and the net asset value per unit improved to HK$2.50. This reflects the strong organic growth achieved through the Manager’s professional expertise, as well as the steady uptrend in Hong Kong’s commercial property sector.

We, ARA Asset Management (Prosperity) Limited, as the manager of Prosperity REIT (the "Manager"), are pleased to announce that our unitholders will be entitled to a total DPU of HK$0.1298 for the year ended 31 December 2007, representing an attractive distribution yield of 8.4%, based on its closing price of HK$1.54 on 31 December 2007.

Operation Review

Prosperity REIT recorded another strong performance in 2007, supported by robust economic growth, together with proactive leasing and asset management efforts. In 2007, revenue grew by 12.7% YoY to HK$244.6 million, while net property income rose by 15.1% YoY to reach HK$192.8 million.

As at 31 December 2007, Prosperity REIT’s portfolio occupancy improved to 98.4% from a year ago. The average effective unit rent rose by 11.7% YoY to HK$13.38 per sq. ft., reflecting the Manager’s proactive and effective leasing strategies.

With increased revenue and continuous cost rationalization, the cost-to-revenue ratio improved to 21.2% from 22.8% in the previous year. Gearing ratio was also lowered to 33.5% as at the end of 2007, enhancing Prosperity REIT’s financial foundation for future acquisitions and growth.

Financial Review

Revenue - During the Reporting Year, revenue stood at HK$244.6 million, which was HK$27.5 million or 12.7% higher than 2006.

The revenue comprised HK$205.9 million of rental and car park income, plus HK$38.7 million of rental related income. Rental and car park income was HK$25.5 million or 14.1% above 2006. The increase was mainly due to an effective and proactive lease management leading to overall improvement in average effective rent.

Net Property Income - Net property income was HK$192.8 million, exceeding 2006 by HK$25.3 million or 15.1%. The cost-to-revenue ratio also improved to 21.2% from 22.8% in 2006. The improvement was a result of the increase in revenue and Manager’s effective cost control measures.

Distribution - The distributable income of the half year from 1 July 2007 to 31 December 2007 is HK$84,396,000, equivalent to a DPU of HK$0.0659. The interim DPU for the six months from 1 January 2007 to 30 June 2007 was HK$0.0639, and the total DPU for the Reporting Year is HK$0.1298, exceeding 2006’s total DPU of HK$0.1201 by 8.1%.

Going Forward

Looking ahead, we are confident that 2008 will be another good year for Prosperity REIT. With the low interest rate environment and thriving economic growth in both Hong Kong and Mainland China, the demand for office and industrial space is expected to maintain its strong momentum. The Manager is committed to implementing well-planned asset enhancement initiatives and proactive business strategies, as well as pursuing yield accretive acquisitions with a view to generating greater returns to unitholders.