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Prosperity REIT 2020 Annual Results

2021-03-04
  • DPU decreased by 2.0% Y-o-Y to HK$0.1791, representing a distribution yield of 7.4%1.
  • NPI decreased by 2.2% Y-o-Y while cost-to-revenue ratio maintained at 20.9%.
  • Occupancy rate remained robust at 96.1% amid challenging market condition.
  • Portfolio situated in strategic decentralized locations benefit from infrastructure underway.
  • Gearing ratio remained at a healthy level of 22.3%.

 

Hong Kong, 4 March 2021 – 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 annual results of Prosperity REIT for the year ended 31 December 2020 (the “Reporting Year”).
 

Distribution per unit decreased by 2.0% Y-o-Y to HK$0.1791, representing a distribution yield of 7.4%1.

During the Reporting Year, the distribution per unit recorded a drop of 2.0% Y-o-Y to HK$0.1791. This represented an annualized distribution yield of 7.4%1 as at 31 December 2020. Payout ratio was maintained at 100%. Prosperity REIT has been proven to be a highly defensive investment tool throughout different economic cycles.

 

Net Property Income decreased by 2.2% Y-o-Y while cost-to-revenue ratio maintained at 20.9%.

During the Reporting Year, Prosperity REIT’s results have been adversely impacted by the COVID-19 pandemic and trade tension between US and China. Net Property Income decreased by 2.2% Y-o-Y mainly due to drop in revenue, caused by negative rental reversion and a drop in occupancy rate. Cost-to-revenue ratio was maintained stable at 20.9% with effective cost control measures in place.

 

1 Based on Prosperity REIT’s closing unit price of HK$2.42 as at 31 December 2020.

 

Occupancy rate remained robust at 96.1% amid challenging market condition.

Despite the intermittent resurgence of the pandemic and Sino-US trade tension, the portfolio occupancy rate remained robust at 96.1%, due to the well-balanced and diversified tenant mix. This enabled us to withstand market volatilities and maintain a stable income stream.

 

Portfolio situated in strategic decentralized locations benefit from infrastructure underway.

69% of our portfolio GRA are situated along the Shatin to Central Link, which will gain competitive advantage upon the expected section opening between Hung Hom and Admiralty in 2022. The infrastructure is expected to provide better connectivity of our properties along Kowloon East and Hung Hom with Hong Kong Island, further unlocking rental value of our portfolio. Prosperity REIT benefits from the decentralization trend which saw 25% of new tenants in 2H19 – FY20 relocating from prime business districts.

 

Gearing ratio remained at a healthy level of 22.3%.

Amidst difficult market conditions, our property valuation dropped by 8.8% Y-o-Y. Yet, our gearing ratio remained at a stable level of 22.3% which provides us with a strong balance sheet to withstand economic volatility and to take advantage of future growth opportunities.

 

Prospects

In 2021, Hong Kong economy will continue to face headwinds from the intermittent resurgence of the pandemic, the uncertainties of the US-China relations, the post Brexit impact, coupled with geopolitical tensions. The progress and effectiveness of COVID-19 vaccines remain key to rebuild confidence in investments.

Within our portfolio, Kowloon East has become a more mature commercial hub, thanks in part to being prioritised by corporates looking for a quality office space and cost-saving measures. We will continue to seize the opportunities brought by the office decentralization trend and the forthcoming full opening of the Shatin to Central Link.

Apart from deploying flexible leasing strategy, we will keep our persistent prudent and proactive management approach to prepare for the challenge in the coming year.

 

– End –

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 seven high-quality properties in the decentralized business districts of Hong Kong, comprising all, or a portion of, three Grade A office buildings, one commercial building, two industrial/office buildings and one industrial building, with a total gross rentable area of about 1.28 million sq. ft..

www.prosperityreit.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

Vicho Chung

Manager, Investments and Investor Relations

vichochung@ara-group.com

(852) 2169 0928

Justin To

Senior Analyst

justinto@ara-group.com

(852) 3605 9209