Prosperity Reit posts steady revenue rise

PUBLISHED : Saturday, 26 February, 2011, 12:00am
UPDATED : Saturday, 26 February, 2011, 12:00am

Prosperity Real Estate Investment Trust chairman Justin Chiu Kwok-hung said the price of the company's shares was stellar last year, and in fact outshone the rise in the price of gold.

'If you compare the growth between gold and [our] share price, we performed much better,' Chiu said. The price of gold rose 29.5 per cent last year, while the property trust's share price rose 32.3 per cent, comfortably outstripping the precious metal, Prosperity Reit said, despite the company's modest performance.

Including the dividend, the overall growth was more than 40 per cent, according to Stephen Chu, chief executive of ARA Asset Management (Prosperity), the trust's manager.

'It was not a bad year,' Chu said.

Distributable income was HK$147.83 million, slightly up on the HK$145.36 million seen in 2009.

The dividend per unit was 11.01 HK cents against 10.98 HK cents in the year-earlier period.

Indicative yield, calculated on the basis of the full-year distribution and the stock's HK$1.76 closing price on December 31 last year, was 6.3 per cent. Total revenue rose 2.5 per cent to HK$270.1 million and net property income grew 2.7 per cent to HK$212.5 million.

Average effective unit rent fell 1.7 per cent to HK$14.67 per square foot. Chiu said a third of the tenants who signed leases in 2007 or early 2008 renewed their contracts last year. Because office rents during that period were higher than last year, average unit rentals had fallen slightly for 2010.

Chiu was optimistic about the trend for rental movement.

He said the company would monitor acquisition opportunities in Hong Kong and China.

'On the mainland, we are looking at office properties in second-tier mainland cities such as Tianjin,' Chiu said. The company was on the lookout for investment opportunities in the suburbs of Shanghai and Guangzhou.

'We can only buy wholly foreign-owned enterprises, which own mainland assets,' Chiu said.

These are generally limited liability companies held by foreign investors, usually international real estate private equity funds.

Chiu expected more of these funds to exit after Beijing's moves to cool the property market this year.

The group's gearing ratio fell to 30.1 per cent last year, from 33.3 per cent in 2009, below the 45 per cent ceiling set by the Securities and Futures Commission.