Press Releases
Prosperity REIT 2025 Annual Results
- Full year distribution per unit (“DPU”) decreased by 3.5% Y-o-Y to HK$0.1156, representing a distribution yield of 8.1%1. 100% payout ratio maintained since listing.
- Revenue decreased by 4.0% Y-o-Y with cost-to-revenue ratio at 25.3%.
- Occupancy rate remained solid at 94.7% amid challenging market conditions.
- Prudent capital management with gearing ratio at 26.4% and interest rate hedging ratio at 60%.
- Multiple ESG achievements demonstrate our long-term commitment to sustainability.
During the Reporting Year, business environment remained challenging under US trade tariffs and geopolitical tensions. Full year DPU decreased by 3.5% Y-o-Y to HK$0.1156. This represented a distribution yield of 8.1%1. Savings in finance cost resulting from lower HIBOR2 partly offsetted the mild decline in rental income. Payout ratio is maintained at 100% since listing.
Revenue decreased by 4.0% Y-o-Y with cost-to-revenue ratio at 25.3%.Revenue decreased by 4.0% Y-o-Y, mainly due to the pressure from both vacancy and rental levels at Prosperity Millennia Plaza in Island East. While Grade A office assets face headwinds, our portfolio’s diversified property types, coupled with low tenant concentration, mitigate risk and foster stable performance. To maintain competitiveness, we offered enhanced landlord provisions for new letting premises to accelerate decision-making process by prospective tenants, given a lower capex incurred in their relocation. Cost-to-revenue ratio was at 25.3%.
The Hong Kong office market remained weak in the first quarter of 2025, but showed improvement in the following nine months, with positive take‑up recorded. Yet, the abundant supply of vacant office space would continue to exert pressure on rents and occupancy rates. Many corporate tenants continue to prioritize cost‑saving measures and look for value for money as well as high quality relocation options. Despite the challenging market conditions, our proactive leasing strategy has upkept the portfolio occupancy rate at a healthy level of 94.7%, outperforming the broader market.
Prospects
Despite the potential volatilities from US trade tariffs and geopolitical tensions, the International Monetary Fund (“IMF”) projects global economic growth to be steady at 3.3% in 2026. Meanwhile, Hong Kong’s economy is forecast to expand by 2.5% to 3.5%. The local Grade A office market is showing a sign of gradual stabilization. Although interest rate has started to ease, a new US Fed Chair might cast uncertainty to the Fed policy.
Prosperity REIT is strategically positioned to benefit from close proximity to major transportation links and green and smart-building enhancements. The Metropolis Tower, our flagship property, leverages on its prime location adjacent to the Hung Hom MTR interchange station for the Tuen Ma and East Rail lines. Our portfolio’s strong foothold in Kowloon East CBD2 capitalizes on the enhanced connectivity from the Central Kowloon Bypass and the synergies from the district’s surrounding commercial, recreational and residential developments. We will continue to deploy flexible and proactive leasing strategies under different market conditions.
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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..
About the REIT Manager
ESR Asset Management (Prosperity) Limited (the "REIT Manager") is the manager of Prosperity REIT. The REIT Manager is a wholly-owned subsidiary of ESR Group Limited. ESR is a leading Asia-Pacific real asset owner and manager focused on logistics real estate, data centres, and energy infrastructure that power the digital economy and supply chain for investors, customers, and communities.
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
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Vicho Chung Manager, Investments and Investor Relations (852) 2169 0928 |
Kenny Kwong Assistant Manager, Investor Relations & Research (852) 2169 0928 |