Hong Kong, 13 August 2015 – 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 2015 (the "Reporting Period").
Continuous growth in rental reversion with a high occupancy rate attributable to an uplift DPU at 6.9 % YoY
Prosperity REIT achieved a rental reversion rate of 16.8%, complemented with a high occupancy rate of 98.5%. Revenue and net property income increased 9.1% and 10.0% to HK$215.8 million and HK$170.7 million respectively. The portfolio average effective unit rent recorded a solid growth of 10.7% to HK$22.40 per sq. ft.. The unaudited distributable income was HK$124.8 million, representing a DPU of HK$0.0871, uplift by 6.9% YoY and an annualized distribution yield of 6.3%1.
Outstanding operation performance in 9 Chong Yip Street post acquisition
Our acquired property, 9 Chong Yip Street, in Kowloon East accounted for 8.7% of the portfolio revenue during the Reporting Period. Occupancy rate has achieved 100% (2014: 95.8%) as at the reporting period end. Substantial asset enhancement works had been completed aligning the building design and facilities to the new office building specification in the vicinity. This largely enhanced our market competitiveness.
Economies of scale and AEIs trim down operating costs effectively
After the injection of 9 Chong Yip Street, the portfolio size expanded by 11.2%, thus effectively share certain operating expenses over a larger portfolio. In addition, in view of the higher electricity tariffs and operating cost of the air conditioning system, we have replaced a total of 2 chiller sets in Trendy Centre and Prosperity Millennia Plaza by a more energy-efficient model, enabling about 15% in energy cost savings for air conditioning provision. Prosperity REIT is able to achieve a cost-to-revenue ratio at a relatively low level of 20.9% in the Reporting Period.
Looking ahead, Kowloon East district continues to evolve to be a relocation option for corporates from core business district. With the high specifications office supply launching in Kowloon East area, the government infrastructure planning and the capital investment by multinational companies and investment funds, investors remain confident in Kowloon East transforming into the second core business district of Hong Kong (“CBD2”) in the long run. Given our refinancing completed last year, there is no major refinancing need in the near future. With all these advantages, stable and sustainable return is anticipated.
1 Based on Prosperity REIT’s closing unit price of HK$2.78 as at 30 June 2015
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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..
Prosperity REIT is managed by ARA Asset Management (Prosperity) Limited, a wholly-owned subsidiary of ARA Asset Management Limited (“ARA”), Asia’s premier integrated real estate fund manager which is listed on the Main Board of the Singapore Exchange Securities Trading Limited since November 2007.
ARA currently manages real estate investment trusts (“REITs”) and private real estate funds that are invested in the office, retail, logistics/industrial, hospitality and residential sectors in the Asia Pacific region, complemented by its in-house real estate management services and advisory services.
Established in 2002, to date it has over 1,100 professionals in 15 cities managing total assets in excess of S$27 billion.
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.
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