Press Releases

2023-08-17

Prosperity REIT 2023 Interim Results

 

Prosperity REIT 2023 Interim Results

  • Distribution per unit (“DPU”) decreased by 14.9% Y-o-Y to HK$0.0745, representing an annualized distribution yield of 8.5%1.
  • 100% payout ratio maintained since listing. Unit buyback continues to be our strategy to return capital to unitholders and enhance DPU and net asset value (“NAV”) per unit.
  • No refinancing needs till 2025. Prudent interest rate hedging arrangement as risk management.
  • Occupancy rate remained solid at 97.0% and negative portfolio rental reversion rate continued to narrow.
  • Revenue decreased by 0.5% Y-o-Y with cost-to-revenue ratio at 22.8%.
  • Since 2014, multiple AEIs have demonstrated our continuous ESG initiatives fostering a green and smart portfolio.
Hong Kong, 17 August 2023 – ARA Asset Management (Prosperity) Limited (the "REIT Manager"), as manager of Prosperity Real Estate Investment Trust ("Prosperity REIT") [SEHK: 808], announces the interim results of Prosperity REIT for the six months ended 30 June 2023 (the “Reporting Period”).
 

DPU decreased by 14.9% Y-o-Y to HK$0.0745, representing an annualized distribution yield of 8.5%1.

During the Reporting Period, elevated interest rates, energy prices, inflation, geopolitical conflicts and trade tensions continue to impact on global economy. DPU recorded a drop of 14.9% Y-o-Y to HK$0.0745 mainly driven by the sharp rise in interest expense Y-o-Y due to rate hikes. This represented an annualized distribution yield of 8.5%1.

100% payout ratio maintained since listing. Unit buyback continues to be our strategy to return capital to unitholders and enhance DPU and NAV per unit.

Prosperity REIT has maintained 100% payout ratio since listing. Benefitting both Prosperity REIT and unitholders, unit buyback continues to be our strategy to return capital to unitholders and enhance DPU and NAV per unit.

No refinancing needs till 2025. Prudent interest rate hedging arrangement as risk management.

Prosperity REIT has no refinancing needs till 2025. Gearing ratio was maintained at a healthy level of 23.7%, providing us with a strong balance sheet to withstand interest rate volatility and to take advantage of future growth opportunities. As at 30 June 2023, 55% of our term loans have been hedged through interest rate swaps, as prudent financial management.

Occupancy rate remained solid at 97.0% and negative portfolio rental reversion rate continued to narrow.

Despite of abundant new office supply, rents and occupancy rates are stabilizing as the local economy revives. The portfolio occupancy rate stood at a stable level of 97.0% as at 30 June 2023 and a high tenant retention rate of 75.4% was achieved. The healthy occupancy rate and tenant retention rate enabled us to provide solid income stream. Negative portfolio rental reversion rate continued to narrow.

Revenue decreased by 0.5% Y-o-Y with cost-to-revenue ratio at 22.8%.

Revenue decreased by 0.5% Y-o-Y mainly due to the frictional tenancy movements in certain properties, though the negative impact was partly offset by the increase in rental related income and the positive rental reversions registered in Trendy Centre and New Treasure Centre. Cost-to-revenue ratio was at 22.8%.

Since 2014, multiple AEIs have demonstrated our continuous ESG initiatives fostering a green and smart portfolio.

Since 2014, AEIs across our portfolio including the renovation of main lobbies and typical floors, the replacement of chiller plants, the installation of smart building management systems and solar panels, and the launching of a tenant app demonstrate our continuous ESG initiatives to foster a green and smart portfolio. This helps to widen and upgrade our tenant base. As a testament to our relentless ESG efforts, Prosperity REIT has attained accolades including a 5-Star rating and Green Star accreditation in 2022 Global Real Estate Sustainability Benchmark (“GRESB”), as well as “Platinum” award under BEAM Plus Comprehensive Scheme for The Metropolis Tower.

Prospects

The International Monetary Fund has forecasted global GDP growth at 3.0% in 2023 after taking into account of the reopening of Mainland China. The Hong Kong economy remains on track for sustained growth in 2023, but high interest rates remain a concern. Our portfolio rental reversion rate has gained momentum especially under a low base effect.
 
Leveraging Hong Kong economic recovery momentum, we will pursue opportunities unleashed by Kowloon East as a thriving premier CBD2, and the enhanced transportation connectivity from the Tuen Ma Line and East Rail Line with cross-harbour extension to Admiralty.
 
[1] Based on Prosperity REIT’s closing unit price of HK$1.76 as at 30 June 2023.
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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 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

About the REIT Manager

ARA Asset Management (Prosperity) Limited (the "REIT Manager") is the manager of Prosperity REIT. The REIT Manager is a wholly-owned subsidiary of ARA Asset Management Limited which is part of the ESR Group, APAC’s largest real asset manager powered by the New Economy and the third largest listed real estate investment manager globally.
 

 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 Contacts

 
Vicho Chung
Manager, Investments and Investor Relations
(852) 2169 0928
 
Kenny Kwong 
Senior Analyst
(852) 2169 0928