Fortune REIT: 1Q15 DPU rose 12% y/y to HK11.63¢, while distributable income increased 12.8% to HK$218.7m. Revenue climbed 13.6% to HK$458.8m, while NPI rose 12.4% to HK$325.m, from the contribution of Laguna Plaza acquired in Jan ’15 and strong rental reversions of 18.4% for renewed leases in the quarter.
Occupancy stood at 98.1% (+0.8ppt q/q). Aggregate leverage stood at 33.2% (+3.8ppt q/q) with effective interest cost of 2.02%.
Management expects strong rental reversions and the contribution from Laguna Plaza contribute to growth this year, respite the disposal of Nob Hill Square on 2 Apr.
Although HK retail sales fell 2.3% y/y in 1Q15, with weakness from luxuries such as jewellery, watches, and valuable gifts, from ongoing austerity measures in China, Fortune REIT is expected to maintain a more resilient performance, as a majority of its tenants across its 17-mall portfolio cater to day-to-day shopping needs.
Fortune REIT is currently trading at 5.8% annualized 1Q15 yield, and 0.7x P/B. This is attractive relative to its peer Link REIT, which trades at 3.7% yield and 1x P/B.
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