Healthy rental reversion and renovations at a Hong Kong mall boosted Fortune Real Estate Investment Trust's (Reit's) earnings for the first half of this year.
Distribution per unit (DPU) for the six months to June 30 rose 6 per cent to 24.78 HK cents (4 Singapore cents) as compared with the same period last year. It will be paid on Aug 29.
Based on the closing unit price of HK$9.25 as at June 30 in Hong Kong, the DPU implied an annualised distribution yield of 5.4 per cent.
Distributable income rose 6.7 per cent year-on-year to HK$470 million, on the back of a 6.1 per cent rise in revenue year-on-year to HK$979.1 million.
Net property income increased 7.9 per cent to HK$705.9 million.
AT A GLANCE
DISTRIBUTABLE INCOME: HK$470 million (+6.7%)
REVENUE: HK$979.1 million (+6.1%)
DISTRIBUTION PER UNIT: 24.78 HK cents (+6%)
Besides healthy rental reversion, ARA Asset Management (Fortune), the Reit's manager, said yesterday the results were also thanks to the renovations at the Belvedere Square mall, which were completed in phases last year.
The Reit holds 17 retail properties in Hong Kong, with about 3.18 million square feet of retail space and 2,713 parking lots.
Its portfolio continued to register steady operating performance, which the manager said was "demonstrating its resilience amid market challenges".
Despite vacancies at Provident Square because of renovations, portfolio occupancy was kept at 96.4 per cent as at June 30.
The Reit posted a rental reversion of 13.3 per cent for renewals during the first half of the year, and portfolio passing rent went up by 7.8 per cent to HK$41.4 per sq ft year-on-year. The retention rate of tenants in the six months was about 85 per cent.
The manager said this showed that Fortune Reit's proactive leasing management and its strong relationship with tenants proved effective.
Its malls also have a "well-diversified trade mix" with a big focus on daily necessities. The manager said: "The resilient nature of these trades has allowed Fortune Reit to perform steadily during economic downtimes in the past."
The Reit's retail properties in Hong Kong were valued at HK$36.2 billion as at June 30, a 2.7 per cent increase from a year ago.
Net asset value per unit was 12.77 HK cents as at June 30, up slightly from 12.76 HK cents as at Dec 31.
Gearing ratio was 29.8 per cent as at June 30, down slightly from 30.1 per cent as at Dec 31. Fortune Reit units closed three HK cents lower at HK$9.75 yesterday.