Fortune Reit's fortunes up in Q2

The Metropolis Mall in Hong Kong is part of Fortune Reit's portfolio of 17 retail properties in the territory valued at HK$35.3 billion as of June 30, a 7.7 per cent increase from Dec 31.
The Metropolis Mall in Hong Kong is part of Fortune Reit's portfolio of 17 retail properties in the territory valued at HK$35.3 billion as of June 30, a 7.7 per cent increase from Dec 31.PHOTO: COURTESY OF ARA ASSET MANAGEMENT

Strong rental reversion and additional income contributions from a shopping mall acquired in January boosted Fortune Reit's second-quarter earnings.
 

Distribution per unit (DPU) for the three months to June 30 rose 11.9 per cent to 11.75 HK cents (2 Singapore cents).

DPU for the first half year was up 12 per cent to 23.38 HK cents. It will be paid on Aug 28.

Distributable income rose 12.7 per cent to HK$221.5 million for the second quarter, on the back of a 13.2 per cent rise in revenue to HK$463.8 million.

Net property income rose 12.8 per cent to HK$329.3 million for the second quarter.

  • AT A GLANCE

  • REVENUE:

    HK$463.8 million (+13.2 %)

  • DISTRIBUTABLE INCOME:

    HK$221.5 million (+12.7%)

  • DISTRIBUTION PER UNIT:

    11.75 HK cents (+11.9%)

Distributable income for the first half was up 12.8 per cent to HK$440.3 million while revenue rose 13.4 per cent to HK$922.6 million. Net property income rose 12.6 per cent to HK$654.4 million for the period.

"Fortune Reit's portfolio of private housing estate retail properties remained resilient in the face of the slowdown in overall retail sales in Hong Kong," said ARA Asset Management (Fortune), the Reit's manager.

During the first half, rental reversion was 22.1 per cent. The average rent across the portfolio was HK$38.4 per sq ft as at June 30, up by 9.5 per cent from last year, it said.

This excluded Laguna Plaza, which it acquired in January for HK$1.91 billion at 4.7 per cent net property yield, and Nob Hill Square, which it sold in the first half for HK$648 million. It had a net property yield of 2.9 per cent.

The portfolio's occupancy was at 97.3 per cent as at June 30, down from 99.1 per cent as at June 30 last year. There were vacancies due to ongoing renovations at Belvedere Square.

Laguna Plaza was the Reit's first acquisition from an independent third party while Nob Hill Square was the first asset disposal since the Reit was listed in 2003.

The Reit's 17 retail properties in Hong Kong were valued at HK$35.3 billion as at June 30, a 7.7 per cent increase from Dec 31, thanks to the addition of Laguna Plaza and offset by the disposal of Nob Hill Square.

Net asset value per unit rose from HK$11.93 as at Dec 31 to HK$12.49 as of June 30.

Gearing ratio was up from 29.4 per cent as of Dec 31 to 30.6 per cent as at June 30, as Fortune Reit entered into additional loan facilities during the period to finance the acquisition of Laguna Plaza.

Fortune Reit units closed unchanged at HK$8.14 yesterday.

A version of this article appeared in the print edition of The Straits Times on July 28, 2015, with the headline 'Fortune Reit's fortunes up in Q2'. Print Edition | Subscribe