Prosperity REIT 2021 Annual Results

• • • • • DPU decreased by 1.6% Y-o-Y to HK$0.1763, representing a distribution yield of 5.7%¹.
        • Unit buyback enhanced DPU, benefitting Prosperity REIT and unitholders as a whole.
        • Occupancy rate remained robust at 97.7% amid tough market conditions.
        • NPI decreased by 1.6% Y-o-Y while cost-to-revenue ratio maintained at 20.9%.
        • Prudent interest rate risk management through healthy gearing ratio as well as adequate hedging level.
        • Continuous strides towards achieving our “Sustainability Vision 2030” demonstrated by multiple green initiatives.

Hong Kong, 10 March 2022 – 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 2021 (the “Reporting Year”).

Distribution per unit decreased by 1.6% Y-o-Y to HK$0.1763, representing a distribution yield of 5.7%¹.

During the Reporting Year, Prosperity REIT’s results have been adversely impacted by ongoing COVID-19 pandemic and geopolitical tensions. Distribution per unit recorded a drop of 1.6% Y-o-Y to HK$0.1763. This represented a distribution yield of 5.7%[1] as at 31 December 2021. Payout ratio is maintained at 100%. Prosperity REIT has proved to be a highly defensive investment tool throughout different economic cycles.

Unit buyback enhanced DPU, benefitting Prosperity REIT and unitholders as a whole.

As a return of capital, unit buyback aligns with unitholders’ interest. We have bought back a total of 39,143,000 units during the Reporting Year for an aggregate consideration of approximately HK$118.7 million (excluding expenses). The buyback enhances net asset value per unit and DPU. We plan to continue unit buyback under appropriate market conditions.

Occupancy rate remained robust at 97.7% amid tough market conditions.

During second half of the year, government consumption vouchers stimulus, stable pandemic conditions and improved unemployment rate benefited the business outlook. Our portfolio occupancy rate picked up and remained robust at 97.7% at year end. The well-balanced and diversified tenant mix enabled us to withstand market volatilities and maintain stable income stream.

Net Property Income decreased by 1.6% Y-o-Y while cost-to-revenue ratio maintained at 20.9%.

Net Property Income decreased by 1.6% Y-o-Y mainly due to drop in revenue caused by negative rental reversion, though partially offset by rising demand for hourly parking. Cost-to-revenue ratio remained stable at 20.9% with effective cost control measures in place.

Prudent interest rate risk management through healthy gearing ratio as well as adequate hedging level.

Amidst difficult market conditions, our gearing ratio remained at a stable level of 23.0%, which provides us with a strong balance sheet to withstand economic volatilities and to take advantage of future growth opportunities. The interest expenses for approximately 70% of our term loans have been hedged through interest rate swaps, keeping our finance costs within a reasonable range under uncertain environment.

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. Apart from revamping our properties with multiple green asset enhancement initiatives, 100% of our property portfolio has attained green building certifications. We also set up rooftop urban farms at our properties. Furthermore, we secured our maiden five-year HK$800 million sustainability-linked term loan for refinancing and general corporate funding purposes. We will continue to explore initiatives that create long-term values for our stakeholders.

Prospects

Whilst Hong Kong economic recovery is expected to continue in 2022 with forecasted GDP growth in the range of 2.0% to 3.5%, uncertainty lingers around intermittent pandemic resurgences, global geopolitical tensions, and interest rate hikes. Nonetheless, opportunities for the Hong Kong economy include the easing border restriction with Mainland China and the upbeat IPO pipeline.

Looking forward, we will continue to deploy flexible asset management strategies under the diligent and professional support of Goodwell-Prosperity Property Services Limited, the property manager of Prosperity REIT. Furthermore, we will continue to capitalize on the opportunities brought by office decentralization and cost-optimization trends, as well as the full opening of Tuen Ma Line and the upcoming opening of Hung Hom to Admiralty cross-harbour section.

[1] Based on Prosperity REIT’s closing unit price of HK$3.08 as at 31 December 2021.

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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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