HONG KONG, 14 March 2007 - Prosperity Real Estate Investment Trust ("Prosperity REIT") [SEHK: 0808] today announced its annual results for the year ended 31 December 2006.

By implementing proactive and well-planned business strategies, we continued to outperform the forecast in Prosperity REIT’s offering circular ("Forecast"). For the year ended 31 December 2006, a total distribution per unit of HK$0.1201 was delivered, 4.8% more than the Forecast. Distribution yield was 7.11%, based on the closing price of HK$1.69 as at 31 December 2006. Net asset value per unit rose by 5.3% to HK$2.38 as at year end. The gearing ratio was lowered to 35.0% from 38.3% as at the end of the year, resulting in savings in our finance costs.

Operation Review

In 2006, the office and industrial/office markets in Hong Kong expanded further, fueled by the continuous growth in economy. Coupled with ARA Asset Management (Prosperity) Limited’s (the "Manager") professional experience and management expertise, Prosperity REIT continued to outperform Forecast and deliver higher returns to unitholders.

For the year under review, Prosperity REIT reported a net property income of HK$167.5 million, exceeding the Forecast by 5.5%. A strong rental reversion rate of 56.7% was attained, complemented by a high tenant retention rate of 74.9%. The average effective unit rent of the portfolio rose by 18.8% to HK$11.98 per sq. ft. The occupancy rate also improved to 97.4% as at 31 December 2006. As a result of overall rental increment and high occupancy rate, our portfolio’s property valuation rose by 6.9% to HK$4,864 million.

Through the Manager’s efficient streamlining of operations, the cost–to-revenue ratio was improved to 22.8% from the 25.0% as stated in the Forecast.

In tandem with strong organic growth, we have successfully secured two yield- accretive acquisitions in 2006, thereby increasing the Manager’s ownership shares in Prosperity Center and strengthening our management control in the building. The acquisitions are expected to bring in additional distributable income in 2007.

Financial Review

Revenue - During the year, revenue stood at HK$217.1 million, which was HK$5.6 million or 2.6% higher than Forecast. The revenue was made up of HK$180.3 million of rental and car park income, plus HK$36.8 million of rental related income. Rental and car park income was HK$6.7 million or 3.9% above Forecast.

Net Property Income - Net property income was HK$167.5 million, exceeding Forecast by HK$8.8 million or 5.5%. Net property income represented approximately 77.2% of the revenue, after the deduction of property management costs and property operating expenses.

Distribution - The distributable income of the half year from 1 July 2006 to 31 December 2006 is HK$78,913,000, equivalent to distribution of HK$0.0624 per unit. In addition to the interim distribution paid of HK$0.0577 per unit, total distribution per unit for the year is HK$0.1201, outperforming the Forecast of HK$0.1146 by 4.8%.

Going Forward

REITs are relatively low-risk investment products, characterized by a stable rental income stream and a high distribution payout ratio. We are confident that the high dividend yield offered by Prosperity REIT, with a wide spread above the risk-free rate, will continue to attract investors.

Looking ahead, as both the local and Mainland economies flourish, the office and industrial/office markets are expected to record continued growth on the back of keen demand from companies seeking expansion opportunities. With the overriding objective of maximizing returns for unitholders, the Manager will undertake well-planned asset enhancement initiatives, further strengthen our tenant base, as well as pursue yield-accretive acquisitions. We are confident that through the successful execution of our business plans, Prosperity REIT will continue to perform well and bring attractive distribution to our unitholders in 2007.