Interim Results for the six months ended 30 June 2012
Disclaimer This document has been prepared by ARA Asset Management (Prosperity) Limited, in its capacity as the manager ( REIT Manager ) of Prosperity Real Estate Investment Trust ( Prosperity REIT ) solely for use at the presentation to analysts in relation to the announcement of the results of Prosperity REIT for the six months ended 30 June 2012 and may not be reproduced or redistributed without permission. Neither this document nor any copy of it may be taken or transmitted into or distributed, directly or indirectly, in the United States or to any U.S. person (within the meaning of Regulation S under the United States Securities Act of 1933, as amended). Neither this document nor any copy of it may be taken or transmitted into Canada or distributed or redistributed in Japan or to any resident thereof. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. By attending this presentation, you are agreeing to be bound by the foregoing restrictions and representing that you have understood and accepted the disclaimers set out herein. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. The information contained in this document is not intended to provide, and you may not rely on this document as providing, a complete or comprehensive analysis of the Prosperity REIT s financial or trading position or prospects. The past performance of Prosperity REIT is not necessarily indicative of the future performance of Prosperity REIT and nothing contained in this document is, or shall be relied on, as a promise or forecast as to the future. The REIT Manager, its affiliates, advisors or representatives make no representation or warranty as to the accuracy, suitability or completeness of the information contained in this document and none of the REIT Manager, Prosperity REIT, nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. This document does not constitute an offer or invitation to purchase or subscribe for any units in Hong Kong or in any other jurisdiction and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto. No action has been taken or will be taken by the REIT Manager, Prosperity REIT, any of their respective affiliates, directors, officers or employees, representatives or advisers, to register these materials as an offering document. This document is restricted from public disclosure until public announcement of Prosperity REIT s 2012 interim results. 2
Portfolio at a glance - Portfolio Map Pg. 4 - The Metropolis Tower Pg. 5 - Prosperity Millennia Plaza Pg. 6 - Prosperity Place Pg. 7 - Trendy Centre Pg. 8 - NPI & Valuation Pg. 9 - Trade Mix Pg. 10 Results Highlights Pg. 11 Financial Review - Consolidated Statement of Comprehensive Income Pg. 12 - Debt Management Pg. 13 Unit Price Performance Pg. 14 Operation Review - Portfolio Occupancy Rate Pg. 15-2012 Asset Enhancement Pg. 16-18 Tenant Relations & Key F acts Pg. 19-20 3
The Metropolis Tower GRA: 271,418 sq. ft 1 Prosperity Center GRA: 149,253 sq. ft. 5 6 7 Harbourfront Landmark GRA: 77,021 sq. ft. 2 Trendy Centre GRA: 173,764 sq. ft. 6 Prosperity Millennia Plaza GRA: 217,955 sq. ft. Prosperity Place GRA: 240,000 sq. ft. 3 4 New Treasure Centre GRA: 86,168 sq. ft. 7 1 2 3 5 4 Grade A Office Building Industrial / Office Building Industrial Building 4
Major Tenants Year of Completion 2001 Appraised Value (HK$ million) 2,637 Percentage of NPI 33.1% 5
Major Tenants Year of Completion 1999 Appraised Value (HK$ million) 1,539 Percentage of NPI 21.3% 6
Major Tenants Year of Completion 1996 Appraised Value (HK$ million) 1,056 Percentage of NPI 13.3% 7
Major Tenants CEH Textiles Year of Completion 1998 Appraised Value (HK$ million) 759 Percentage of NPI 12.1% 8
Net Property Income Valuation Six months ended 30 June 2012 As at 30 June 2012 Property Name NPI HK$ 000 Percentage of NPI Property Name Valuation HK$ million Percentage of Valuation The Metropolis Tower 38,572 33.1% Prosperity Millennia Plaza 24,824 21.3% Harbourfront Landmark 1 9,117 7.8% Prosperity Place 15,453 13.3% Trendy Centre 14,078 12.1% Prosperity Center 1 10,246 8.8% New Treasure Centre 1 4,197 3.6% Total 116,487 100.0% The Metropolis Tower 2,637 36.1% Prosperity Millennia Plaza 1,539 21.0% Harbourfront Landmark 1 414 5.7% Prosperity Place 1,056 14.4% Trendy Centre 759 10.4% Prosperity Center 1 667 9.1% New Treasure Centre 1 240 3.3% Total 7,312 100.0% Notes: 1. Portion 9
Trade Mix by Gross Rentable Area As at 31 December 2011 Size of tenant premises on gross rentable area (as at 31 December 2011) Percentage Above 10,000 sq.ft. 21.6% 5,001 sq.ft. - 10,000 sq.ft. 12.5% 2,001 sq.ft. - 5,000 sq.ft. 26.6% 1,001 sq.ft. - 2,000 sq.ft. 25.5% 30.9% Electronic / Technology Manufacturing / Trading 32.2% 11.1% Textile /Garment Logistics 3.5% 2.5% Advertising / Media Consultancy / Research 4.6% 2.9% Finance / Investment Real Estate 0.2% 12.1% Others 1,000 sq.ft. and below 13.8% Total 100.0% 10
Six months ended 30 June 2012 Unaudited (Y-o-Y Comparison) Distribution Per Unit HK$0.0660 10.9% DPU rose year-on-year by 10.9% to HK$0.0660 Revenue HK$149.3 mil 10.8% Net Property Income HK$116.5 mil 11.4% Average Effective Unit Rent HK$16.22 psf 9.8% Occupancy Rate (as at 30 June 2012) 99.0% 0.5%¹ Rental Reversion Rate 33.1%² vs 12.3% 20.8%¹ Tenant Retention Rate 80.0%² vs 70.4% 9.6%¹ Strong topline revenue contributed by 99.0% occupancy rate, 33.1% rental reversion and 80.0% tenant retention rate Cost-to-revenue Ratio 22.0% (0.4%)¹ As at 30 June 2012 Unaudited (Compared with 31 Dec 2011) Property Valuation HK$ 7,312 mil 4.6% Gearing Ratio 24.2% (1.4%)¹ Notes: 1. Absolute change 2. For all renewal leases from 1 Jan 2012 to 30 June 2012 11
For the six months ended 30 June 2012 (HK$ 000) (unaudited) 2011 (HK$ 000) (unaudited) (restated) Revenue 149,317 134,736 Total property operating expenses (32,830) (30,132) Net property income 116,487 104,604 Interest income 44 338 Manager s fee (17,759) (15,615) Trust and other expenses (3,722) (3,532) Increase in fair value of investment properties 314,547 702,275 Finance costs (21,824) (22,292) Profit before taxation 387,773 765,778 Taxation (11,617) (10,074) Profit for the period 376,156 755,704 Distributable income 1 90,844 80,593 DPU (HK$) 0.0660 0.0595 Note: 1. After adjustments of HK$285.3 million for (i) increase in fair value of investment properties; (ii) manager s fee; (iii) finance costs; and (iv) deferred tax 12
Loan Facilities as at 30 June 2012 Total Debt HK$2,200 million Tenure 5 years ¹ Term Loan 2 HK$1,770 million Revolving Loan 3 HK$430 million Floating Interest Rate (per annum) HIBOR + 0.81% Notes: 1. The facilities will mature and become payable on 16 August 2015 2. As at 30 June 2012, $1,416 million (80%) was hedged at 1.335% (excluding the interest spread of 81 bps) with plain vanilla swap, until 16 June 2015 3. HK$10 million of the revolving loan facility has been utilized as at 30 June 2012 13
25.0% 20.0% Unit Price increased by 18.0% in 1H12 17.6% 18.0% 22.4% 15.0% 10.0% 8.5% 9.9% 10.7% 5.0% 0.0% 0.6% 3.1% Regal REIT Hui Xian REIT Yue Xiu REIT Champion REIT The Link REIT Sunlight REIT Prosperity REIT Fortune REIT Price Performance As at 29/6/2012 As at 30/12/2011 Percentage Change Absolute Relative Change to Prosperity REIT 1. Prosperity REIT HK$1.77 HK$1.50 18.0% 2. Hang Seng REIT Index 4,559 4,077 11.8% 6.2% 3. Hang Seng Index 19,441 18,434 5.5% 12.5% 14
Property Name GRA (sq.ft.) Occupancy Rate as at 30 June 2012 Occupancy Rate as at 31 Dec 2011 1. The Metropolis Tower 271,418 99.2% 98.5% 2. Prosperity Millennia Plaza 217,955 100.0% 100.0% 3. Harbourfront Landmark 1 77,021 100.0% 100.0% 4. Prosperity Place 240,000 97.7% 98.8% 5. Trendy Centre 173,764 97.4% 96.3% 6. Prosperity Center 1 149,253 100.0% 99.2% 7. New Treasure Centre 1 86,168 100.0% 100.0% Portfolio 1,215,579 99.0% 98.8% Notes: 1. Portion 15
AEIs completed in 1H2012 1. The concrete parapet wall at the roof garden of Prosperity Place was replaced with a tempered glass wall for tenants to enjoy unobstructed views of the Victoria Harbour as well as the Kai Tak Cruise Terminal. 2 2. A vertical green wall was installed at the carpark entrance of Prosperity Place to create an eco-friendly surrounding and increase the environmental awareness of our tenants and the community. 3. A uniquely and meticulously designed green wall was installed at the entrance lobby of The Metropolis Tower to further promote green life to our tenants. 1 3 16
Trendy Centre Common Washroom Renovation Estimated CAPEX Target Commencement Expected Completion ~HK$5 M September 2012 July 2013 Before After 17
Trendy Centre Cargo Lift Lobbies Renovation Estimated CAPEX Target Commencement Expected Completion ~HK$3 M September 2012 July 2013 Before After 18
Excellent Tenant Relations The courteous and professional property management staff of Goodwell-Prosperity Property Services Limited create a friendly and caring atmosphere for the tenants, thereby strengthen our tenant relationships. In 1H12, Prosperity REIT maintained a close-tozero rent delinquency rate. 9 July 2012 Prosperity Place Courtesy Visit To Tenant 27 April 2012 Prosperity Place Cocktail Event 1 July 2012 The Metropolis Tower Firework Night 19
Key Facts as at 30 June 2012 IPO 16 December 2005 Indicative Yield 7.5% (based on the closing unit price of HK$1.77 as at 29 June 2012 and DPU of HK$0.0660 for 1H12) Total number of units 1,370,991,728 Market Capitalization Average daily trading volume HK$2.43 billion 1.3 million units Free Float 79.9% Portfolio Size 1,215,579 sq.ft. (gross) No. of Tenants (as at 31 December 2011) 550 No. of Carpark spaces 407 Financial Engineering Nil 20
ARA Asset Management (Prosperity) Limited (as manager of Prosperity REIT) Ms. Mavis Wong Acting Chief Executive Officer maviswong@ara.com.hk Ms. Carey Kwan Manager, Investor Relations careykwan@ara.com.hk Mr. Vicho Chung Assistant Finance Manager vichochung@ara.com.hk Units 5508-10, 55/F, The Center 99 Queen s Road Central Hong Kong Tel: +852 2169 0928 Fax: +852 2169 0968 www.prosperityreit.com www.ara-asia.com