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Prosperity REIT 2013 Annual Results

2014-03-04

• 10.4% YoY uplift in DPU and 6.6%1 attractive distribution yield
• Decentralization trend bolstered strong results
• Transformation of land use in Prosperity Place brought in retail tenants
• Strengthening Kowloon East presence through yield-accretive acquisition

 

Hong Kong, 4 March 2014 – 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 final results of Prosperity REIT for the year ended 31 December 2013 (the “Reporting Year”).

 

Uplift in DPU and attractive distribution yield

 

Prosperity REIT enjoyed another prosperous year and recorded strong results in the Reporting Year. Distributable income rose 11.9% from the previous year, mainly due to increased rental revenue and stable finance costs.

 

The REIT Manager is pleased to announce a total distribution per unit (“DPU”) of HK$0.1495 to our unitholders. That is equal to a 10.4% year-on-year (“YoY”) increase, and it represents an attractive distribution yield of 6.6%[1].

 

Decentralization trend bolstered strong results

 

Despite the slower overall rental growth in the office market, rental levels in Hong Kong’s decentralized areas maintained a competitive edge, prompting companies to continue shifting into these areas. As our portfolio focuses on this market, in particular Kowloon East, the trend had a favourable effect on Prosperity REIT’s results.

 

The rental reversion rate was 34.9%, while our portfolio occupancy rate remains at an optimal level of 98.9%. The valuation of our property portfolio rose mildly by 7.1% YoY to HK$8,518 million. As at 31 December 2013, the net asset value per unit was HK$4.57, a YoY increase of 7.8%.

  

Transformation of land use in Prosperity Place brought in retail tenants

 

The recent transformation of Prosperity Place from an industrial/office building into a commercial building with zero waiver fee allowed us to bring in retail tenants, pushing up both the property value and revenue. The progress has been satisfactory.

 

Strengthening Kowloon East presence through yield-accretive acquisition

 

On 15 December 2013, Prosperity REIT announced its proposed acquisition of 9 Chong Yip Street, a Grade A office building in Kwun Tong. The acquisition was approved in an Extraordinary General Meeting held on 15 January 2014, and was completed on 22 January 2014. After completion of the acquisition, the gross rentable area of Prosperity REIT’s portfolio was enlarged by 11.2% to 1,352,174 sq. ft.. We firmly believe that this yield-accretive acquisition will create operating synergies in our portfolio and thereby achieve economies of scale. It strengthens our presence in the Kowloon East district and diversifies the tenant base of Prosperity REIT’s portfolio to achieve a more stable income stream.

 

Prospects

 

Barring unforeseen circumstances, we are confident that the acquisition of 9 Chong Yip Street will bring additional distributable income to our unitholders in the coming year. Backed by our continuous prudent and proactive management approach for optimizing returns, we are committed to delivering to unitholders stable revenue in the coming years.

 

Despite there are signs of economic recovery in Europe and the United States, the global picture is still uncertain. We remain cautiously optimistic in Hong Kong’s economy in the year ahead, and will prudently avail ourselves of the opportunities it offers.

  

About Prosperity REIT

 

Prosperity REIT [SEHK: 808]is a Hong Kong collective investment scheme authorized under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). Prosperity REIT owns a diverse portfolio of eight high-quality properties in the decentralized business districts of Hong Kong, comprising all, or a portion of, three Grade A office buildings, two commercial buildings, two industrial/office buildings and one industrial building, with a total gross rentable area of about 1.35 million sq. ft..

www.prosperityreit.com

 

About ARA Asset Management (Prosperity) Limited

 

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.

www.ara-asia.com

 

Disclaimer

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 Contact

Carey Kwan

Investor Relations Manager

careykwan@ara.com.hk

 

Abel Mak

Property Analyst

abelmak@ara.com.hk

 

Tel: (852) 2169 0928

Fax: (852) 2169 0968



[1]Based on Prosperity REIT’s closing unit price of HK$2.26 as at 31 December 2013