Prosperity Real Estate Investment Trust expects lease renewals will see rental income grow by more than 10 per cent, since many of the contracts were signed two years ago following the global financial crisis. About 42 per cent of its office tenants were due to renew their contracts this year while a further 45 per cent would expire next year, said Justin Chiu Kwok-hung, the chairman of ARA Asset Management (Prosperity), which manages the reit. The rents would be adjusted to market levels as the rates were low when the contracts were signed, he added. Prosperity Reit yesterday announced distributable income for the first half grew 8.47 per cent from a year earlier to HK$80.59 million. It attributed the growth to positive business prospects, which propelled demand for office space in the city, and the drop in finance cost by nearly 40 per cent. The trust will distribute 5.95 HK cents per unit, up 7.2 per cent from 5.55 HK cents a year ago. Chiu said the payout represented an annualised distribution yield of 6.5 per cent, higher than the yield for acquiring industrial buildings which was about 3 per cent. While it was not attractive to make any acquisitions now, the reit would remain on the lookout for projects with high yields as rents would increase at a steeper rate than property prices. The reit owns seven office and industrial properties in non-core business districts such as Hung Hom, Kwun Tong and North Point. Its net property income fell 1.1 per cent to HK$104.6 million in the first half from HK$105.8 million a year earlier. The occupancy rate of its properties rose to 98.5 per cent from 98.3 per cent while tenant retention rate leapt to 70.4 per cent from 61.3 per cent. Chiu said the manager was confident that the reit would 'continue to benefit from the stable growth of the Hong Kong economy' and expected the increase in demand for office space to continue. Prosperity Reit shares rose 1.2 per cent to close at HK$1.71 yesterday.