Valuations boost Regal Reit profit but payout falls

PUBLISHED : Wednesday, 21 March, 2012, 12:00am
UPDATED : Wednesday, 21 March, 2012, 12:00am


Regal Real Estate Investment Trust (Regal Reit) saw a drop of more than 40 per cent in distributable income last year to HK$397.9 million, causing the final distribution per unit to decline by a similar percentage to 6.3 HK cents.

'The total distributable income in the preceding year was comparatively higher due largely to the higher rental package predetermined for 2010 and the recognition in 2010 of part of the aggregate guaranteed variable rent between 2007 and 2010,' said Lo Yuk-sui, the chairman of Regal Reit's manager Regal Portfolio Management.

The reit, whose portfolio includes six hotels in Hong Kong, said its profit tripled from HK$997.1 million to nearly HK$2.98 billion due to strong appreciation in the value of its properties.

However, its net rental and hotel income dropped 21.4 per cent to HK$707 million.

The average occupancy rate rose 5 percentage points to 90.9 per cent, while the revenue per available room posted an increase of nearly 30 per cent to HK$862.99.

'The tourism and hotel industry in Hong Kong is expected to further prosper, which will, in turn, benefit Regal Reit to grow its future capital value and profit earnings,' Lo said.

Another Hong Kong-listed reit, Prosperity Reit, which owns seven commercial properties in non-core business districts, recorded a 10.6 per cent increase in distributable income last year to HK$163.5 million.

Its manager, ARA Asset Management (Prosperity), announced the distribution per unit would increase 9.2 per cent to 12.02 HK cents.

The reit's net property income rose 0.5 per cent to HK$211.5 million.

'We expect the Hong Kong and global economy to continue to experience market uncertainty. However, Asia's stable fundamentals are likely to cushion it to a certain extent,' said Justin Chiu Kwok-hung, the chairman of the reit's manager. 'We are cautiously optimistic that we will continue to deliver positive results in 2012.'

Shares of Regal Reit yesterday fell 0.47 per cent to close at HK$2.13, while Prosperity Reit slipped 0.56 per cent to HK$1.78.