Prosperity REIT 2014 Annual Results
Hong Kong, 5 March 2015 – 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 2014 (the “Reporting Year”).
Landmark year with major acquisition and refinancing completed
2014 was a landmark year for Prosperity REIT. The acquisition of 9 Chong Yip Street, our first major acquisition, was successfully completed. Together with the successful refinancing of the bank loan facilities, we are all ready to capture growth opportunities.
9.0% YoY uplift in total DPU and 6.2%1 attractive distribution yield
During the Reporting Year, distributable income increased 10.7% year-on-year (“YoY”) to HK$231.4 million as a result of the additional income from 9 Chong Yip Street and the solid performance across Prosperity REIT’s entire portfolio. The REIT Manager is pleased to announce a total distribution per unit (“DPU”) of HK$0.1630, representing a rise of 9.0% YoY and an attractive distribution yield of 6.2%.
Harvesting from effective asset management and yield accretive acquisition
Our proactive leasing strategies, attentive property management services, as well as the premium quality of our properties led to admirable results during the Reporting Year. Revenue and net property income increased 18.0% and 16.9% to HK$403.4 million and HK$312.1 million respectively. A strong rental reversion rate of 32.1% across the entire portfolio was achieved. Occupancy rate remained stable at 97.7% as at 31 December 2014.
The acquisition of 9 Chong Yip Street, being the first major acquisition in Prosperity REIT’s history, expanded our portfolio size by 11.2% to 1,352,174 sq. ft., added economies of scale to our operations and generated additional distribution to our unitholders. The acquisition was completed on 22 January 2014. It provided a partial contribution, accounting for 8.3% of the portfolio revenue during the Reporting Year.
Prudent financial position while still allowing sufficient growth opportunities
During the Reporting Year, new bank loans were secured in order to finance the acquisition of 9 Chong Yip Street and refinance the existing loans. Accordingly, gearing ratio increased to 28.6% as at 31 December 2014, a prudent level while still allowing sufficient future growth opportunities. As a result of the refinancing, our debt maturity profile was extended with no major refinancing needs until November 2019. There will also be financial flexibility as some previously pledged properties were released following the refinancing exercise.
Looking ahead, we will continue to actively manage our assets, invest prudently and closely monitor the financial risks. At the same time, the prospects of Kowloon East, where the majority of Prosperity REIT’s properties are located in, remain intact as it stays on track to become the second central business district of Hong Kong. As such, we are confident that our strategically positioned portfolio, which leverages on Kowloon East’s gradual emergence into a commercial hub, will continue to bring good results to our unitholders.
 Based on Prosperity REIT’s closing unit price of HK$2.64 as at 31 December 2014
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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 eight high-quality properties in the decentralized business districts of Hong Kong, comprising all, or a portion of, three Grade A office buildings, two commercial buildings, two industrial/office buildings and one industrial building, with a total gross rentable area of about 1.35 million sq. ft..
About ARA Asset Management (Prosperity) Limited
Prosperity REIT is managed by ARA Asset Management (Prosperity) Limited, a wholly-owned subsidiary of ARA Asset Management Limited (“ARA”), Asia’s premier integrated real estate fund manager which is listed on the Main Board of the Singapore Exchange Securities Trading Limited since November 2007.
ARA currently manages real estate investment trusts (“REITs”) and private real estate funds that are invested in the office, retail, logistics/industrial, hospitality and residential sectors in the Asia Pacific region, complemented by its in-house real estate management services and advisory services.
Established in 2002, to date it has over 1,100 professionals in 15 cities managing total assets in excess of S$26 billion.
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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