Fortune – BT
Fortune Reit H1 profit rises 1.5% to HK$143.3m
FORTUNE Real Estate Investment Trust has reported a net profit – income available for distribution – of HK$143.3 million (S$27.7 million) for the first half of 2007, up 1.5 per cent from a year ago.
Total revenue for the Reit, which holds 11 retail malls in Hong Kong, was down slightly by 0.8 per cent due to vacancies arising from repositioning and asset enhancement initiatives at some of its malls.
The Reit, which is partly owned by Li Ka-Shing’s Hong Kong flagship Cheung Kong Holdings and listed on the Singapore Exchange (SGX) mainboard, has not made any acquisitions since 2005.
Justin Chiu, chairman of ARA Asset Management, which manages the Reit, said, however, that due to the ‘stabilisation of the interest rate environment’, it could now be looking to acquire more properties.
‘We are looking at opportunities in China, but looking at it cautiously,’ he said, adding that ARA was also looking at properties in Hong Kong, and that Cheung Kong has, ‘a lot of properties’.
Fortune Reit has not revealed a target portfolio size. Mr Chiu said: ‘We don’t want to limit ourselves.’
Fortune Reit currently has a gearing ratio of 24.6 per cent. Based on the 35 per cent cap for Reits that are not rated, it estimates that it has a further debt flexibility of about HK$1.5 billion.
Mr Chiu also emphasised that Fortune Reit could raise its gearing to 60 per cent to fund future acquisitions if required. He said the Reit might seek a rating, depending on the size of possible acquisitions. ‘It only takes about a month to get a rating,’ he added.
The portfolio’s base rent also increased by 4.8 per cent to HK$24.54 psf on a year-on-year basis.
Fortune Reit reported yesterday that its annualised tax exempt yield was 5.4 per cent based on the closing unit price of HK$6.60 as at June 29. At the close of trading yesterday, Fortune Reit ended at HK$6.25 per unit, up five cents.
Rental reversion for renewals in H1 was 11 per cent. The better performing malls such as Ma On Shan Plaza, Waldorf Garden Property and City One Shatin Property registered rental reversions of 40 per cent, 18.7 per cent and 11.4 per cent respectively.