Not vested.
Hongkong Land Sees Renewals Increasing as Economy RecoversBy Chia-Peck Wong
March 5 (Bloomberg) -- Hongkong Land Holdings Ltd., one of the biggest office landlords in the city’s financial hub, expects to see
high occupancy levels and “steady rentals†this year as
companies start to rehire amid a more optimistic economic outlook.
Positive rental reversions, or the renewal of leases at higher rates, compensated for a
rise in office vacancies in the Central district last year, Hongkong Land said yesterday after announcing a return to profit for 2009.
“It’s not as if no one’s knocking on our doors,†Chief Executive Officer Y.K. Pang said at a briefing yesterday in the city.
“There’s not a lot of new supply†in Hong Kong. “People are rehiring in Hong Kong; we are
cautiously optimistic.â€Economic growth in Hong Kong, a trade and financial hub for China, beat estimates in the fourth quarter as the city’s gross domestic product rose a seasonally adjusted 2.3 percent from the previous three months.
Hongkong Land managed to raise average rents at its offices to
HK$84 ($10.82) a square foot last year, from HK$66 a year earlier, Chief Financial Officer Geoffrey Brown told the same briefing. That beat the government’s rental index for prime office space, which dropped 17 percent in the last quarter from the same period in 2008.
The government also said in a report yesterday that private office completions in Hong Kong fell 56 percent in 2009 to 151,000 square meters (1.6 million square feet), the lowest in three years. They may drop to 122,000 square meters in 2010, it said.
Net rental income from Hongkong Land’s Hong Kong office and retail properties
rose 19 percent to $611 million during the year, the company said in its earnings statement. Its shopping space in Hong Kong was fully let, it said.
Returns to Profit
Still, the developer, which owns offices including the Exchange Square and Landmark complexes in Hong Kong, declined to say whether rents would continue to rise this year.
“The world is not out of the woods yet in terms of the financial crisis. The recovery we are seeing is still quite fragile,†Pang said.
Hongkong Land yesterday reported a net income of $1.62 billion, or 72.96 cents a share, for 2009, swinging from a loss of $109 million, or 4.79 cents the previous year. Revenue rose to $1.32 billion from $1.02 billion.
Home prices in Hong Kong and Singapore rose last year after an economic recovery and low interest rates boosted demand. Hongkong Land booked revenue from homes sold in the two cities and Macau last year. MCL Land Ltd., Hongkong Land’s Singapore unit, last week reported a record 2009 profit of $154 million from a year-ago loss.
Property Profit
The developer also owns properties in Vietnam, Thailand, Indonesia and Chongqing, China.
Hongkong Land’s underlying profit, which excludes revaluation losses and gains, more than doubled to $777 million, or 34.6 cents a share, from $375 million or 16.4 cents a year earlier, the company said.
Residential property contributed $386 million to underlying profit compared with a breakeven result in 2008, the company said.
In Hong Kong, the company will continue to focus on luxury home projects, Pang told the briefing. In Singapore, MCL Land will complete another three projects this year as the “general tone of the residential market is quite positive,†Pang said. Sale prices are “robust,†he said.
The full-year dividend was raised by 23 percent to 16 cents a share.
The company’s shares are down 3.4 percent this year after almost doubling last year. The stock fell 0.42 percent to $4.78 ahead of yesterday’s earnings.
--Editors: Nerys Avery, Andreea Papuc
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