Prosperity REIT 2022 Annual Results

100% payout ratio maintained since listing. Full year distribution per unit (“DPU”) decreased by 7.8% Y-o-Y to HK$0.1625, representing a distribution yield of 8.2%¹.

Occupancy rate remained robust at 96.3% amid tough market conditions.

Net property income (“NPI”) decreased by 4.0% Y-o-Y with cost-to-revenue ratio at 22.1%.

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

Ramped up efforts towards realizing our “Vision 2030” sustainability ambitions.

Hong Kong, 9 March 2023 – ARA Asset Management (Prosperity) Limited (the "REIT Manager"), as manager of Prosperity Real Estate Investment Trust ("Prosperity REIT") [SEHK: 808], announces the annual results of Prosperity REIT for the year ended 31 December 2022 (the “Reporting Year”).

100% payout ratio maintained since listing. Full year DPU decreased by 7.8% Y-o-Y to HK$0.1625, representing a distribution yield of 8.2%¹.

During the Reporting Year, HK economy was dragged by stringent anti-epidemic measures, rising interest rates and geopolitical tensions. Full year DPU recorded a drop of 7.8% Y-o-Y to HK$0.1625. This represented a distribution yield of 8.2%[1] as at 30 December 2022. Payout ratio is maintained at 100% since listing. Prosperity REIT has proved to be a highly defensive investment tool.

Occupancy rate remained robust at 96.3% amid tough market conditions.

Despite difficult market conditions, our portfolio occupancy rate stood at a stable level of 96.3% as at 31 December 2022. Tenant retention rate increased by 3.5%[2] Y-o-Y to 76.1%. Stable occupancy rate and high retention rate enabled us to withstand economic volatility and provide solid income stream. Towards the end of the year, a gradual return to normalcy under relaxed social distancing measures, as well as loosened travel restrictions, benefits the business outlook.

NPI decreased by 4.0% Y-o-Y with cost-to-revenue ratio at 22.1%.

NPI decreased by 4.0% Y-o-Y mainly due to negative rental reversion rates registered and COVID-19 related relief measures. Cost-to-revenue ratio was at a steady level of 22.1%.

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

There are no refinancing needs till 2025. Gearing ratio remained at a stable level of 23.4%, providing us with a strong balance sheet to withstand economic volatilities and to take advantage of growth opportunities. As at 31 December 2022, 55% of our term loans have been hedged through interest rate swaps, as prudent financial management.

Ramped up efforts towards realizing our “Vision 2030” sustainability ambitions.

As a testament to the progress of our sustainability journey, we have been conferred a 5-Star rating and Green Star accreditation in 2022 Global Real Estate Sustainability Benchmark (“GRESB”). Apart from the maiden sustainability-linked interest rate swap, 100% of Prosperity REIT’s financing is now sustainability-linked. While 100% of our property portfolio has already attained green building certifications, we take a leap forward with The Metropolis Tower achieving “Platinum” award under BEAM Plus Comprehensive Scheme. Looking forward, we will continue to explore green initiatives that create long-term values for our stakeholders.

Prospects

According to the International Monetary Fund, global economic growth is projected to soften to 2.9% in 2023 amidst elevated interest rates, inflation and geopolitical tensions. On the other hand, Hong Kong’s 2023 GDP is forecasted to rebound at a growth rate of 3.5% to 5.5% as China – Hong Kong border reopens. In particular, the restoration of quarantine-free travel provides catalysts for the revival of Hong Kong’s real estate, retail and tourism activities.

As Hong Kong economy gradually resumes normal, we will benefit from Kowloon East as a new premier CBD2 of Hong Kong. We also continue to capitalize on the strategic location of our flagship property, The Metropolis Tower, at Hung Hom Station, being the interchange station of Tuen Ma Line and East Rail Line with cross-harbour extension to Admiralty.

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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.

Media and Investor Contacts

[1] Based on Prosperity REIT’s closing unit price of HK$1.99 as at 30 December 2022 (last trading day of the year).

[2] Absolute change.