Prosperity REIT 2022 Interim Results

• Distribution per unit (“DPU”) decreased by 2.9% Y-o-Y to HK$0.0875, representing an annualized distribution yield of 7.3%¹.
• Unit buyback enhanced DPU and net asset value per unit (“NAV per unit”), benefitting Prosperity REIT and unitholders.
• Occupancy rate remained robust at 96.0% amid tough market conditions.
• Net property income (“NPI”) decreased by 4.5% Y-o-Y with cost-to-revenue ratio at 21.2%.
• Prudent interest rate hedging arrangement as risk management.
• Completion of main lobby renovation and commencement of East Rail Line Cross-Harbour Extension bolster the competitive edge of The Metropolis Tower.
• Continuous strides towards achieving our “Sustainability Vision 2030” demonstrated by multiple green initiatives.

Hong Kong, 11 August 2022 – 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 2022 (the “Reporting Period”).

DPU decreased by 2.9% Y-o-Y to HK$0.0875, representing an annualized distribution yield of 7.3%¹.

During the Reporting Period, the local economy was impacted by the Fifth Wave COVID-19 variant outbreak, tightened social distancing measures and ongoing border restrictions. DPU recorded a drop of 2.9% Y-o-Y to HK$0.0875. This represented an annualized distribution yield of 7.3%[1] as at 30 June 2022. Payout ratio is maintained at 100%. Prosperity REIT has proved to be a highly defensive investment tool. 

Unit buyback enhanced DPU and NAV per unit, benefitting Prosperity REIT and unitholders.

A total of 14,894,000 units was bought back during the Reporting Period for an aggregate consideration of approximately HK$42.8 million (excluding expenses). Unit buyback enhances DPU and NAV per unit, aligning with unitholders’ interest. Further unit buyback contingent on market and business factors.

¹ Based on Prosperity REIT’s closing unit price of HK$2.40 as at 30 June 2022.

 Occupancy rate remained robust at 96.0% amid tough market conditions.

Despite stringent social distancing restrictions stemming from the Fifth Wave pandemic, our portfolio occupancy rate remained robust at 96.0%. The well-balanced and diversified tenant mix enabled us to withstand economic volatility and maintain stable income stream.

 NPI decreased by 4.5% Y-o-Y with cost-to-revenue ratio at 21.2%.

NPI decreased by 4.5% Y-o-Y mainly due to drop in revenue caused by negative rental reversion rates, as well as COVID-19 related relief measures. Cost-to-revenue ratio remained stable at 21.2%.

 Prudent interest rate hedging arrangement as risk management.

Our gearing ratio remained at a stable level of 23.1%, providing us with a strong balance sheet to withstand economic volatilities and to take advantage of future growth opportunities. As at 30 June 2022, the interest costs for approximately 79% of our outstanding term loans have been hedged through interest rate swaps, keeping our finance costs within a reasonable range under uncertain environment.

 Completion of main lobby renovation and commencement of East Rail Line Cross-Harbour Extension bolster the competitive edge of The Metropolis Tower.

Concurrent with the opening of the Cross-Harbour Extension of East Rail Line, the facelifting of main lobby at The Metropolis Tower has been completed. The renovated lobby incorporates a contemporary design with a new 550 sq. ft. area green wall composed of over 2,000 plants. For better energy efficiency, the indoor light intensity can be automatically adjusted by a smart control system. The strategic location and upgraded building image sharpen the competitive edge of our flagship property.

 Continuous strides towards achieving our “Sustainability Vision 2030” demonstrated by multiple green initiatives.

Pledging to our “Sustainability Vision 2030”, we have continued to ingrain sustainability into our business operations. We secured our maiden sustainability-linked interest rate swap as our second green financing initiative. More solar panels will be installed at our properties during second half of the year. Looking forward, we will continue to explore green initiatives that create long-term values for our stakeholders.

Prospects

Against the backdrop of downside risks including rising interest rate, inflation, geopolitical tensions, COVID-19 variant outbreaks and supply chain strains, the World Bank has downgraded the 2022 global GDP growth forecast from 4.1% to 2.9%. Likewise, Hong Kong GDP growth forecast is cut to 1.0% - 2.0% in 2022. Nonetheless, stimuli for Hong Kong economy’s rebound include the new round of consumption voucher scheme, easing travelling restrictions, revival of IPO pipeline and containment of the pandemic.

 Looking forward, we will capitalize on opportunities brought by Kowloon East as a new premier CBD2 of Hong Kong. We also seek to prosper from the strategic location of Hung Hom station, being the interchange station of Tuen Ma Line and East Rail Line, with our flagship property, The Metropolis Tower.

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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.

www.esr.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.

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