Prosperity shareholders reap higher rewards

Prosperity Real Estate Investment Trust yesterday announced a 12.6 per cent increase in distributable income per unit for last year, thanks to a rise in revenue.

Distribution per unit rose to 13.54 HK cents from 12.02 HK cents, while the total distribution income grew 14.3 per cent to HK$186.9 million from HK$163.5 million.

The reit owns seven commercial and industrial properties in decentralised business districts such as Kwun Tong, Hung Hom and North Point.

Mavis Wong, the chief executive of ARA Asset Management (Prosperity), which manages the trust, said it charged over 30 per cent more when tenants renewed their leases last year, with a 70 per cent retention rate. She expects double-digit growth in rents when renewing leases this year.

In the final quarter of last year, the government approved the conversion of its Prosperity Place property in Kwun Tong to commercial under the industrial buildings revitalisation scheme.

Wong said this could bring in more commercial tenants paying higher rents. "For example, we can now lease the property to beauty parlours, dance schools, playgroups, or some retail shops and restaurants," she said. "We can only ask for about a 15 per cent increase in rent if we continue to use it as a grade B office building, but for retail tenants, we can charge 20 to 30 per cent more."

Monthly office rent was about HK$20 per square foot in the area but HK$23 to HK$25 for retail premises.

The firm would also apply to change the use of Trendy Centre in Lai Chi Kok from industrial to commercial in the final quarter of this year as it had already spent HK$15 million upgrading the property for such conversion.

Prosperity's shares rose 1.9 per cent to HK$2.66 yesterday.