Fortune REIT warns of slower growth

Fortune Real Estate Investment Trust (0778) is expecting slower growth in the second half of 2023 after its income available for distribution for the first half fell by 2 percent yearly to HK$447.7 million, with distribution per unit falling 3 percent to 22.36 HK cents.

Revenue for the first six months of the year rose 4.7 percent yearly to HK$908.7 million, partly due to the absence of rental rebates during the period.

The property trust had offered rental concessions to tenants during the fifth wave of Covid-19 a year ago.

Net property income climbed 6 percent year-on-year to HK$672 million as of end June, while total property operating expenses edged up 1 percent yearly to HK$216 million.

Owning 16 private housing estate retail properties in Hong Kong and one neighbourhood mall in Singapore, the property trust saw the total value of its investment properties remain flat at HK$39.54 billion, versus HK$39.5 billion as of December 2022, with the occupancies reaching 94.1 percent.

In Hong Kong, the average capitalization rate of its assets stayed unchanged at 4.3 percent.

Five of the 16 properties reported full occupanccies, while Fortune Metropolis in Hung Hom recorded the lowest occupancy rate of 82.9 percent.

Chief executive Justina Chiu Yu expects retail sales and rental revenue will post slower growth in the second half due to a higher base last year, though she believes shops selling daily necessities -- which acount for 70 percent of tenants -- will be less impacted.

She also set the lease renewal rate target at 70 to 80 percent.