REIT readies for downturn after robust year by Mandy Lo
Champion Real Estate Investment Trust (2778) has warned that 2010 revenues are unlikely to repeat those of last year due to
higher vacancies and reduced rents at its Central office property developments.
For the year ended December 31, the REIT's total distributable income grew 26.5 percent to HK$1.31 billion, but total distribution shrank 11.8 percent from 2008 to HK$1.24 billion as the company intended to hold more cash amid market uncertainties.
"We prefer to keep more cash and are looking for acquisition opportunities.
"However, it is not the best timing to act now when there are
signs of bubbles in the property market," said Adrian Lee Ching- ming, chief executive at Champion's manager, Eagle Asset Management.
Distribution per unit declined 17.8 percent to 26.17 HK cents.
Net property income hit HK$1.71 billion and revenue jumped 26.1 percent to HK$2.04 billion.
The occupancy rate at Citibank Plaza, an office property which generated two-thirds of total income, fell to
87.2 percent as at December, a record low since the REIT came into being 2006. Lee said the occupancy rate may stay low this year as it takes time to fill office space while financial sector gradually recovers and eventually starts expanding.
About
15 percent of tenants will have to renew leasing contracts this year, he said.
Langham Place, a commercial complex in Mong Kok, posted rosy performance numbers, the shopping mall was fully occupied and offices enjoyed a
98.5 percent occupancy rate.Forty three percent of tenants at the mall will have to renew leases this year and Lee expected a double-digit growth in rents. About 36 percent of leases at Langham office will expire this year.
Shares of Champion REIT slid 0.297 percent to HK$3.36 yesterday.
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