Fortune Real Estate : 2012 First Quarter Financial Results - Press Release
05/10/2012| 08:01am US/Eastern
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Hong Kong: Units 5508-5510, 55/F The Center, 99 Queen's Road
Central
Tel +852 2169 0928 Fax +852 2169 0968
Press Release
Singapore: 6 Temasek Boulevard, #16-02 Suntec Tower Four,
Singapore 038986
Tel +65 6835 9232 Fax +65 6835 9672
Fortune REIT's DPU up 15.6% year-on-year
20.8% portfolio rental reversion
Effective interest cost lowered to 2.87%
7.8%1 annualised dividend yield
Financial Results Overview
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1Q2012
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1Q2011 % Change
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Revenue (HK$ million)
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259.2
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218.8 18.5%
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Net property income (HK$ million)
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185.3
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161.0 15.1%
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Income available for distribution (HK$ million)
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131.8
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112.8 16.9%
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Distribution per unit (HK cents)
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7.78
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6.73 15.6%
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10 May 2012. ARA Asset Management (Fortune) Limited
(the "Manager"), as manager of Fortune Real Estate Investment
Trust ("Fortune REIT"; SEHK: 778; SGX: F25U), is pleased to
announce the financial results of Fortune REIT for the three
months ended 31 March 2012 ("1Q2012" or "Reporting
Period").
Fortune REIT fired up three growth engines. Fortune
REIT has delivered a particularly good set of results for
1Q2012. Revenue and net property income grew by 18.5% and
15.1% to HK$259.2 million and HK$185.3 million respectively.
The robust growth was underpinned by strong rental reversions
across the portfolio, remarkable return from completed asset
enhancement initiatives ("AEIs") as well as the additional
income from two new properties acquired on 17 February 2012.
While the contribution from Belvedere Square and Provident
Square was only for half of the Reporting Period, it will be
fully reflected from the present quarter onwards. Besides
acquisition growth, Fortune City One ("FCO") and Ma On Shan
Plaza ("MOSP") performed exceptionally well as a result of
yield-enhancing AEIs.
Consequently, income available for distribution achieved a
record high of HK$131.8 million, up 16.9% from last year. The
distribution per unit ("DPU") for 1Q2012 increased by 15.6%
year-on-year to HK 7.78 cents, representing an annualised
dividend yield of 7.8%1.
Solid asset performance amid economic uncertainties.
Fortune REIT's private housing estate retail portfolio
demonstrates its resilience again by delivering a solid asset
performance amidst the softening of the economy. A strong
rental reversion of 20.8% was registered across the enlarged
portfolio while passing rent for the existing 14 properties
went up by 10.9% year-on-year. Leasing momentum remained
robust with the occupancy rate maintained at a healthy 97.1%,
despite frictional vacancies due to ongoing AEIs at
FCO.
Completed AEIs fuelled growth at the 2 largest malls.
The AEIs at FCO and MOSP started to contribute
positively in 1Q2012. Fuelling by the completed AEIs, net
property income for FCO and MOSP increased by 13.0% and 18.1%
respectively for the reporting period compared with a year
ago. The HK$100 million project to fully renovate FCO
commenced in October 2011 and the first phase was
completed with enhanced rental starting to kick-in during
1Q2012. The remaining phases of AEIs at FCO
1 Based on HK$4.0, the average closing unit price in
Singapore and Hong Kong, as of 30 March 2012.
Page 1 of 3
ARA Asset Management (Fortune) Limited
Hong Kong: Units 5508-5510, 55/F The Center, 99 Queen's Road
Central
Tel +852 2169 0928 Fax +852 2169 0968
Press Release
Singapore: 6 Temasek Boulevard, #16-02 Suntec Tower Four,
Singapore 038986
Tel +65 6835 9232 Fax +65 6835 9672
are progressing well and scheduled for completion by the end
of 2012. The manager remains optimistic of achieving a ROI of
not less than 15% for the project. On the other hand, the
subdivision work of a
50,000 sq ft space in MOSP, previously occupied by a Chinese
restaurant, was successfully completed in
4Q2011, achieving an impressive ROI of 73% with a capital
expenditure of approximately HK$12 million.
A robust balance sheet with lower interest cost. As at
31 March 2012, Fortune REIT's balance sheet remains healthy
with a gearing of 25.9% and available revolving credit
facilities of HK$310 million. The effective interest cost for
1Q2012 has reduced substantially to 2.87%, 78 bps less than
3.65% for FY2011. The interest coverage ratio stands at a
comfortable 5.3 times. Fortune REIT's weighted average term
to maturity for its outstanding loan is approximately 3.7
years with no refinancing needs until 2015.
"We are delighted to report the remarkable performance of
Fortune REIT in the first quarter of the year, setting a
positive tone for the rest of 2012. The strong results were
backed by a solid asset performance and additional income
stream from newly acquired properties. Looking ahead,
consumer sentiment in Hong Kong remains healthy, but we are
cautious about Hong Kong's economic outlook given the
unresolved euro-zone debt crisis and the faltering growth in
the advanced economies. Notwithstanding, Fortune REIT's
portfolio of necessity shopping malls has proven its
resilience amidst uncertainties." commented Mr. Anthony Ang,
Chief Executive Officer of the Manager.
Ms. Justina Chiu, Deputy Chief Executive Officer of the
Manager concluded, "The progress of the AEIs in FCO is
encouraging. The recently completed first phase has achieved
a greater-than-expected return to our Unitholders. We are
positive that the entire project can be completed on schedule
by the end of this year. FCO will continue to be one of our
highlight projects in 2012 and an important revenue growth
driver
for the property and the overall portfolio."
Page 2 of 3
ARA Asset Management (Fortune) Limited
Hong Kong: Units 5508-5510, 55/F The Center, 99 Queen's Road
Central
Tel +852 2169 0928 Fax +852 2169 0968
Press Release
Singapore: 6 Temasek Boulevard, #16-02 Suntec Tower Four,
Singapore 038986
Tel +65 6835 9232 Fax +65 6835 9672
About Fortune REIT. Fortune Real Estate Investment
Trust ("Fortune REIT") is a real estate investment trust
consituted by a Trust Deed entered into on 4 July 2003 (as
amended) made between ARA Asset Management (Fortune) Limited,
as the Manager of Fortune REIT, and HSBC Institutional Trust
Services (Singapore) Limited, as the Trustee of Fortune REIT.
Fortune REIT was listed on the Singapore Exchange Securities
Trading Limited and The Stock Exchange of Hong Kong Limited
on 12 August 2003 and 20 April 2010 respectively.
Fortune REIT holds a portfolio of sixteen retail properties
in Hong Kong, comprising approximately 2.45 million sq ft of
retail space and 1,989 car parking lots. The retail
properties are Fortune City One, Ma On Shan Plaza, Metro
Town, Fortune Metropolis, Belvedere Square, Waldorf Avenue,
Provident Square, Caribbean Square, Smartland, Tsing Yi
Square, Jubilee Square, Nob Hill Square, Centre de Laguna,
Hampton Loft, Lido Avenue and Rhine Avenue. They house
tenants from diverse trade sectors such as supermarkets, food
and beverage outlets, banks, real estate agencies, and
education providers. More
information can be found at www.fortunereit.com.
About ARA Asset Management (Fortune) Limited, the Manager.
Fortune REIT is managed by ARA Asset Management (Fortune)
Limited, a wholly-owned subsidiary of ARA Asset Management
Limited, which is listed on the Main Board of the Singapore
Exchange Securities Trading Limited. More information can be
found at www.ara-asia.com.
Disclaimer. The information contained in this press
release does not constitute an offer or invitation to sell or
the solicitation of an offer or invitation to purchase or
subscribe for Units in Fortune REIT in Hong Kong, Singapore
or any other jurisdiction.
Media and investor contacts
ARA Asset Management (Fortune) Limited
Justina Chiu
Deputy Chief
Executive Officer justinachiu@ara.com.hk
Jenny Hung
Senior Manager,
Investment and Investor Relations jennyhung@ara.com.hk
+852 2169 0928 +852 2169 0928
Strategic Financial Relations Limited
Mandy Go mandy.go@sprg.com.hk
+852 2864 4812
Maggie Au maggie.au@sprg.com.hk
+852 2864 4815
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