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Champion REIT Announces 2020 Interim Results

– The office portfolio delivered stable growth from rental income
– Challenging retail environment impacted interim results
– Agile measures to react swiftly and embrace new normal

Champion Real Estate Investment Trust (stock code: 2778), the owner of Three Garden Road and Langham Place, announces its financial results for the six months ended 30 June 2020.

Ms. Ada Wong, Chief Executive Officer, Champion REIT

Ms. Amy Luk, Investment and Investor Relations Director, Champion REIT

Overview
The COVID-19 pandemic in the first half of 2020 has put the global economy on pause, and posing unprecedented challenges to all walks of life. Various social distancing regulations and cross-border controls have resulted in significant slowdown in economic activities and brought tourism to a standstill. Amid the sluggish market sentiment, the Trust’s base rental income recorded a slight increase but turnover rent vanished. As a result, the Trust recorded a 7.5% decline in distributable income to HK$804 million (2019: HK$869 million) and a 7.7% decline in distribution per unit (“DPU”) to HK$0.1229 (2019: HK$0.1332).

Three Garden Road
Leasing activities and demand of the office market in Central were subdued in the midst of the pandemic. Despite the precarious market environment, rental reversion for Three Garden Road remained positive in the first half of 2020, bolstering the rental income to HK$770 million (2019: HK$738 million). Passing rents of the property increased to HK$109.5 per sq. ft. (based on lettable area) as at 30 June 2020, compared with HK$107.8 per sq. ft. as at 31 December 2019. Occupancy stood at 90.2% as at 30 June 2020.

Langham Place Office Tower
As 60% of the Office Tower’s tenants are in the lifestyle category, their business operations had been suspended intermittently under the social distancing regulations imposed by the government. Total rental income of Langham Place Office Tower increased by 4.8% to HK$194 million (2019: HK$185 million) mainly due to positive rental reversion as some of the leases were signed before the pandemic outbreak. Passing rents edged up moderately to HK$47.1 per sq. ft. (based on gross floor area) while occupancy remained at a high level of 97.8% as at 30 June 2020.

Langham Place Mall
The Hong Kong retail market has experienced an extremely detrimental operating environment since the outbreak of COVID-19 in end of January. Total rental income dropped by 20.6% to HK$378 million mainly due to the drop in turnover rent. Our leasing strategy maintains a focus on keeping high occupancy rates, as such, the Mall remained fully occupied as at 30 June 2020.

Financing
The Trust continued to take a proactive approach in liability management. With the uncertainties ahead, we have diversified our funding source and enhanced the financial flexibility of the Trust. A total of USD300 million 10-year medium term notes were issued and standby banking facilities of HK$2.0 billion have been arranged during 1H 2020.

Distribution
The Trust recorded a 7.5% decline in distributable income to HK$804 million (2019: HK$869 million) and a 7.7% decline in distribution per unit (“DPU”) to HK$0.1229 (2019: HK$0.1332) amid the sluggish market sentiment. This represents an annualised distribution yield of 6.4% based on the closing price of HK$4.03 as at 30 June 2020.

Outlook
The outlook of the second half of the year is bleak. The coronavirus pandemic could continue to affect economic activities amid a persistent spread of COVID-19 globally and locally. In addition, geopolitical tensions and deteriorating local economic situation would deal another blow to our tenants.

To adapt to the new normal, we have launched an online shop to sell vouchers of the retail tenants in the mall and lifestyle tenants in the office tower respsectively. In addition, we have made available pionereering virtual tours for Three Garden Road and Langham Place Office Tower to facilitate potential overseas tenants to view our properties remotely.

We will continue to adopt a prudent approach on investment opportunities with long-term growth potentials for unitholders. We are committed to working shoulder to shoulder with tenants and stakeholders to pursue long-term sustainability and ride out difficult times together.

About Champion REIT (stock code: 2778)
Champion Real Estate Investment Trust is a trust formed to own and invest in income- producing office and retail properties. The Trust focuses on Grade-A commercial properties in prime locations. It currently offers investors direct exposure to 2.93 million sq. ft. of prime office and retail properties by way of two landmark properties, Three Garden Road and Langham Place, one on each side of the Victoria Harbour.

Website: www.championreit.com

“The Real Champion – Entrepreneur in Action” Receives Overwhelming Responses Business Leaders Share Pathways to Success

*(Left to right) Mr. Eddy Tang, Founder and CEO of Union Medical Healthcare; Ms. Ada Wong, CEO of Champion REIT and Mr. Louie Chung, Group Owner of LUBUDS F&B Group shared their personal insights*

Champion Real Estate Investment Trust (“Champion REIT”) (Stock Code: 2778), owner of Three Garden Road and Langham Place, is pleased to have received overwhelming responses for its first-ever entrepreneur programme, “The Real Champion – Entrepreneur in Action”. More than 270 students have signed up for the programme while an online sharing and briefing session was held last Friday.

During the sharing session, business leaders including Ms. Ada Wong, CEO of Champion REIT; Mr. Eddy Tang, Founder and CEO of Union Medical Healthcare; and Mr. Louie Chung, Group Owner of LUBUDS F&B Group reflected upon their pathways to success. In particular, Ms. Ada Wong highlighted her career change from an iBanker to a CEO, and discussed the summer job experiences at Champion REIT. Mr. Eddy Tang, on the other hand, shared his insider story of choosing to run a business rather than being a doctor, and also mentioning the trainee opportunities available at Union Medical Healthcare. Moreover, Mr. Louie Chung talked about his road to successfully establishing a “F&B empire” and challenges encountered throughout the years.

Mr. Eddy Tang, Founder and CEO of Union Medical Healthcare, said, “While it was a tough decision to change my role from being a doctor to a business owner, I believe this was an absolutely right move when I look back. We focus in IT, service and brands, and consider continuous value creation is vital to the sustainability of every company. I do hope participants of this programme will be able to better develop their personal attributes and potential, the winners might also have a chance to be selected for our management trainee programme where the trainees will be offered opportunities to have management as their mentors.”

Mr. Louie Chung, Group Owner of LUBUDS F&B Group, said, “As an entrepreneur, I regard networking and doing what you have genuine interest in as the prime attributes of achieving success. Prior to my entrepreneurial career, I have already started investing in various businesses and continued to accumulate experiences for future possibilities. I do hope participants of this programme can understand what they are heading into and have a successful career in the future.”

Ms. Ada Wong, Chief Executive Officer of Champion REIT, said, “In my career, my professional roles as an iBanker and a CEO have both taught me the indispensable quality of perseverance and passion for career success. Needless to say, nurturing a splendid network with various parties to forge long-term relationship is also crucial. In my view, the programme will provide a good platform for students to acquire practical marketing skills, and I do hope that our sharing today have inspired the participants in one way or another. Moving forward, we will strive for providing youth development support while creating shared values for our business and stakeholders.”

“The Real Champion – Entrepreneur in Action” aims to provide tertiary students the opportunity to acquire practical business skills through the guidance of successful business leaders. Successful applicants will participate in a competition to boost the sales of Langham Place cash coupons by executing their marketing plans. The competition is taking place in July while the announcement of winners will be made in mid-August.

Click https://youtu.be/8jWufdXFriY for the full online sharing and briefing session.

About Champion REIT (Stock Code: 2778)
Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade-A commercial properties in prime locations. It currently offers investors direct exposure to 2.93 million sq. ft. of prime office and retail properties by way of two landmark properties, Three Garden Road and Langham Place, one on each side of the Victoria Harbour.
Website: www.championreit.com

Champion REIT Launches “The Real Champion – Entrepreneur in Action”

Champion Real Estate Investment Trust (“Champion REIT”) (Stock Code: 2778), owner of Three Garden Road and Langham Place, regards sustainability as a core part of its business strategy and culture. The Trust will therefore be organising The Real Champion – Entrepreneur in Action programme this summer to support youth development despite the challenging business environment. Its aim is to provide tertiary students the opportunity to acquire practical business and marketing skills through the guidance of successful business leaders.

As part of the programme, successful applicants will engage in a competition to boost sales of Langham Place cash coupons, specifically by devising and executing their own business and marketing plans, which will be conducted mainly online to allow greater flexibility. Winners will gain cash coupons as reward and various opportunities for further development, including CEO shadowing and mentoring. Ahead of the campaign, an online introduction and sharing session will be held on 3 July 2020. Business leaders, including Ms. Ada Wong, CEO of Champion REIT; Mr. Eddy Tang, CEO of Union Medical Healthcare; and Mr. Louie Chung, Group Owner of LUBUDS F&B Group, will offer personal insights into entrepreneurialism as well as marketing tips to participants. Details of the programme can be found here.
https://stg.championreit.com/files/en/Champion%20Entrepreneur%20in%20Action_Programme_final.pdf

Ms. Ada Wong, Chief Executive Officer of Champion REIT, said, “In view of the limited internship and job opportunities available to students on the market due to the impact of pandemic this year, we strive to empower tertiary students through our first-ever entrepreneur programme. While growing our business, we recognise our responsibility to contribute to society. Going forward, we will do our utmost to integrate sustainable development into our business strategy, creating long-term value not only for our business, but also for the communities in which we serve.”

About Champion REIT (Stock Code: 2778)
Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade-A commercial properties in prime locations. It currently offers investors direct exposure to 2.93 million sq. ft. of prime office and retail properties by way of two landmark properties, Three Garden Road and Langham Place, one on each side of the Victoria Harbour.
Website: www.championreit.com

Champion REIT Crowned “Best Investor Relations” and “Best CEO”, Bags Five Accolades from FinanceAsia

*Champion REIT receives the “Best Investor Relations”, “Best Environmental Stewardship”, “Most Committed to Social Causes” and “Best Managed Company” Awards*

Champion Real Estate Investment Trust (“Champion REIT”; stock code: 2778), the owner of Three Garden Road and Langham Place, has garnered the “Best Investor Relations” and Ms. Ada Wong was honoured with the “Best CEO”, both as top honours. Champion REIT also captured three more awards, for a total of five prestigious prizes in 2020 Asia’s Best Companies survey organized by FinanceAsia. These accolades are glowing testimony to the REIT’s outstanding performance in fostering investor relations while recognising its continuous excellence in environmental, social and governance (ESG) aspects.

Champion REIT has earned the following five accolades:
– Best CEO – Ms Ada Wong (ranked 1st)
– Best Investor Relations (ranked 1st)
– Best Environmental Stewardship (ranked 2nd)
– Most Committed to Social Causes (ranked 2nd)
– Best Managed Company (ranked 3rd)

Ms. Ada Wong, Chief Executive Officer of Champion REIT, said, “We are truly honoured to have earned numerous titles from FinanceAsia. These accolades have definitely indicated the wide recognition we have gained within the investment community. We would like to express our gratitude towards investors and analysts for your great vote of confidence to Champion REIT. Moving forward, we will continue to maintain our solid bond with investors while upholding the ESG standards and delivering sustainable development and ongoing business growth for unitholders”.

Based on the views of investors and analysts, FinanceAsia’s research provides a unique insight into their perception of Asia’s listed companies, their investor relations, commitment to ESG matters and acknowledges outstanding performances in industry sectors.

Champion REIT Announces 2019 Annual Results

Distributable income reached HK$1,648 million, up 2.3%;
The portfolio continued to see positive rental reversion

Champion Real Estate Investment Trust (stock code: 2778), the owner of Three Garden Road and Langham Place, announces its financial results for year ended 31 December 2019.

Summary of financial results

FY 2019 FY 2018 Change
Total Rental Income (HK$ mil) 2,778 2,677 + 3.8%
Net Property Income (HK$ mil) 2,481 2,405 + 3.1%
Distributable Income (HK$ mil) 1,648 1,611 + 2.3%
Distribution per unit (HK$) 0.2666 0.2614 + 2.0%

Value as at 31 Dec 2019 31 Dec 2018 Change
Gross Value of Portfolio (HK$ mil) 81,178 83,135 – 2.4%
Net Asset Value per Unit (HK$) 11.04 11.42 – 3.3%
Gearing Ratio 18.0% 17.6% + 0.4pp

Overview
Champion REIT delivered a growth in distributable income by 2.3% to HK$1,648 million and distribution per unit (“DPU”) by 2.0% to HK$0.2666. The results once again demonstrated the complementary nature of the Trust’s property portfolio.

Three Garden Road
Three Garden Road achieved positive rental reversion, boosting the total rental income of the property to HK$1,512 million, up 8.7%. Occupancy of the property was 93.0% as at 31 December 2019. Given the gap between the market rents and expiring rents in 2019, passing rents of the property increased to HK$107.76 per sq. ft. (based on lettable area) as at 31 December 2019.

Langham Place Office Tower
Business performance of Langham Place Office was stable. Occupancy of the property stood high at 97.7% as at 31 December 2019 and market rents stayed put throughout 2019. Positive rental reversion was achieved, driving up total rental income by 7.2% to HK$375 million. Passing rents increased to HK$46.48 per sq. ft. (based on gross floor area) as at 31 December 2019.

Langham Place Mall
The slowdown in retail sales which started at the beginning of 2019 deepened in the second half of the year on flagging local economic conditions as well as drawn-out social unrest subsequently. Although passing base rents increased to HK$190.49 per sq. ft. (based on lettable area) as most leases were confirmed in advance, total rental income of the mall decreased 4.9% to HK$891 million due to marked decrease in tenant sales hence turnover rent in the second half of 2019. Rent concessions were considered on case by case basis. Despite the sluggish market conditions, the mall remained fully occupied as at 31 December 2019.

Financing
The Trust continued to take a proactive approach in liability management and further enhanced the credit profile. The Trust entered into interest rate swaps in favourable market windows to increase the fixed rate debt portion to 64.2% as at 31 December 2019 to mitigate interest rate risks.

Distribution
Amid the precarious business environment, the Trust nonetheless delivered a mild growth in distributable income by 2.3% to HK$1,648 million and DPU by 2.0% to HK$0.2666 (2018: HK$0.2614). Based on the closing unit price of HK$5.15 recorded on 31 December 2019, the total DPU represents a distribution yield of 5.2%.

Asset Value
The Trust’s investment properties as at 31 December 2019 were appraised at a total value of HK$81.2 billion, representing a 2.4% decrease from HK$83.1 billion as at 31 December 2018.

Outlook
The global economic uncertainties, exacerbated by the outbreak of the novel coronavirus (COVID-19), will adversely affect both the office demand and retail sentiments in 2020. As an externally oriented economy, Hong Kong will especially be affected by the pessimistic economic outlook and potentially deepening recession. With the ongoing political tensions in Hong Kong remain unsettled, the already weakening business environment is expected to weigh on both the office demand and retail sales performance.

Office demand, market rent and retail sales will retrench as businesses over all walks of life are severely impacted by the viral outbreak. While we are watchful of the challenges in the short term, our financial strength and discipline should allow us to weather the difficult period. Furthermore, we will continue to take a prudent approach in identifying diversification opportunities for external growth for the Trust globally in the coming year.

About Champion REIT (stock code: 2778)
Champion Real Estate Investment Trust is a trust formed to own and invest in income- producing office and retail properties. The Trust focuses on Grade-A commercial properties in prime locations. It currently offers investors direct exposure to 2.93 million sq. ft. of prime office and retail properties by way of two landmark properties, Three Garden Road and Langham Place, one on each side of the Victoria Harbour.
Website : www.championreit.com

Three Garden Road Becomes First Existing Building Awarded with WELL Certification at Platinum Level in Hong Kong

*Garden in the City Centre, the first large-scale outdoor staircase painting at Grade A commercial building in Hong Kong*

Three Garden Road, one of the two landmark properties owned by Champion Real Estate Investment Trust (“Champion REIT”; stock code: 2778), has received WELL Core Certification at Platinum level under the WELL Building Standard by the International WELL Building InstituteTM (“IWBITM”), making it the first existing building in Hong Kong to score at the highest level of WELL certification.

Three Garden Road has fulfilled the WELL Platinum standard, including air, water, light, nourishment, movement, thermal comfort, sound, materials, mind and community. This recognition is a testament to Champion REIT’s commitment in enhancing people’s health and environmental preservation in our properties.

Ms. Ada Wong, Chief Executive Officer of Champion REIT, said, “We are very happy to achieve the first WELL Platinum rating among existing buildings in Hong Kong. While new buildings can be tailored in accordance with existing WELL guidelines, it is more challenging for buildings in use to obtain the certification as enhancement works are needed to meet WELL requirements. Thanks for the asset management team’s effort to make it happen.”

Mr Rick Fedrizzi, Chairman and CEO of IWBI, said, “Three Garden Road sets an example for many existing buildings in Hong Kong that WELL is achievable for all buildings. By achieving WELL Core Certification for the project, Champion REIT demonstrates its commitment to advancing health and well-being for its own employees, and all the people who work for and do business with the tenants inside the project.”

Three Garden Road – The First Existing Building with WELL Core Certification at Platinum level in Hong Kong:
– Embracing health in the design of public space through:
Natural connection of indoor and outdoor space – over 25% of exterior site area with natural elements
Gardening, exercise space and fitness centre to promote healthy lifestyle
Staircase painting and art pieces to create lively atmosphere
– Achieving excellent air quality with HKIAQ Certificate Excellent Class for 12 consecutive years
– Achieving satisfactory water quality with WSD Quality Water Scheme for nine consecutive years
– Providing shuttle bus for tenants to encourage the use of public transport
– “Champion Our Wellness” experiences, eg. mindful eating, trail run events and music performances

The first commercial building to pride displaying staircase art in Hong Kong:
The latest addition to Three Garden Road is an eye-catching work of staircase painting named Garden in the City Centre. To support local art development, Champion REIT invited Ms. Zue Chan, a young Hong Kong painting artist, to create this staircase art. On top of being a pleasant sight, the painted staircase carries our intent to encourage tenants to take the stairs for healthy life.

About Champion REIT (Stock code: 2778)
Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade-A commercial properties in prime locations. It currently offers investors direct exposure to 2.93 million sq. ft. of prime office and retail properties by way of two landmark properties, Three Garden Road and Langham Place, one on each side of the Victoria Harbour.
Website: www.championreit.com

Champion REIT Embraces Sustainable Development Earns Top Honours in 2019

Champion Real Estate Investment Trust (“Champion REIT”) (Stock Code: 2778), owner of Three Garden Road and Langham Place, regards sustainability as an integral part of its corporate culture. To assimilate sustainability into business objectives and daily operation, the Trust takes a proactive approach to devising sustainability strategies which keep abreast of the fast-changing world. The Trust triumphed various sustainability-related awards in 2019.

Major awards in 2019:
– The Chamber of Hong Kong Listed Companies – Award for Sustainability Excellence
– The Hong Kong Management Association – Sustainability Grand Award (Top Honour)
– Hong Kong Investor Relations Association – Overall Best IR Company Award (Top Honour)
– Hong Kong Economic Journal – Listed Company Award of Excellence 2019
– The Hong Kong Management Association – Best Annual Reports Award 2019

Sustainability indices:
– “Green Star” and “Grade A on Public Disclosure” under Global Real Estate Sustainability Benchmark
– Constituent of Hang Seng Corporate Sustainability Benchmark Index for the fourth consecutive year

Ms Ada Wong, Chief Executive Officer of Champion REIT, said, “We are very pleased to have won various awards again, recognising our efforts in pursuing sustainable development and enhancing our corporate governance standard. We will continue to heed international market benchmarks in improving our overall business performance. Furthermore, we will actively join hand with our stakeholders in advancing sustainability progress with the goals of achieving multiple wins and creating shared values for our business and stakeholders.”

The Chamber of Hong Kong Listed Companies – Award for Sustainability Excellence
The award aims to foster the highest corporate governance, business ethics and board leadership standards in Hong Kong, and also recognise companies for delivering excellent corporate governance performance and promoting best practices, thereby furthering long-term optimum development of corporate governance culture.

The Hong Kong Management Association – Hong Kong Sustainability Grand Award (Top Honour)
The award recognises enterprises demonstrating due consideration of economic, social and environmental aspects in their pursuit of sustainable development, while also achieving outstanding business results. Champion REIT won four awards at the Hong Kong Sustainability Award (Small-sized Organisation Category) organised by The Hong Kong Management Association, namely the Hong Kong Sustainability Grand Award, Hong Kong Sustainability Award, Special Recognition for Outstanding Sustainability Initiative: Social Dimension and Environmental Dimension.

Hong Kong Investor Relations Association – Overall Best IR Company Award (Top Honour)
The award recognises not only Champion REIT’s continuous efforts in business development and operation, investor relations and its push for progress and breakthroughs, but also its excellence across various business endeavours. The award winners were selected by local and overseas buy-side and sell-side analysts and fund managers voting online.

Hong Kong Economic Journal – Listed Company Award of Excellence 2019
The award is a credible indicator of industries worthy of reference by investors. It honours listed companies demonstrating exceptional performance in the past year. Champion REIT again earned recognition from the capital market for its remarkable performance.

The Hong Kong Management Association – Best Annual Reports Award 2019: Excellence Award for Small Size Entries
The Hong Kong Management Association encourages organisations to provide timely, accurate, comprehensive and clearly presented information in their annual reports to stakeholders. Themed “Champion Our Wellness”, the design of Champion REIT’s 2018 Annual Report echoes the Trust’s vision to go beyond managing its premium office and retail spaces by bringing wellness to the forefront. The Trust creates favourable communities where tenants, customers and employees can achieve work-life balance and fulfilment in life.

Accolades in 2019

May
Hong Kong Investor Relations Association
– Overall Best IR Company Award (the ONLY mid-cap company receiving the honour)
– Best IR Company
– Best IR by Chairman / CEO – Ms Ada Wong
– Best IRO – Ms Amy Luk
– Best Investor Meeting
– Best Digital IR
– Best Investor Presentation Material
– Best Annual Report
– Best IR Team – Ms Ada Wong, Ms Amy Luk, Ms Sophia Wong, Mr Jonathan Chan

Top 100 Hong Kong Listed Companies Research Centre
– Soaring Companies Award

June
Corporate Governance Asia
– Asia’s Best CEO – Ms Ada Wong
– Best Investor Relations Professional – Ms Amy Luk
– Best Investor Relations Company

July
The Hong Kong Institute of Financial Analysts and Professional Commentators Limited
– 2019 Outstanding Listed Companies Award

August
MerComm. Inc
– 2019 International ARC Awards
Cover Design – Gold
Interior Design – Silver

International Annual Report Design Awards
– Cover Design – Gold

November
The Hong Kong Management Association
– Hong Kong Sustainability Grand Award
– Hong Kong Sustainability Award
– Special Recognition for Outstanding Sustainability Initiative: Social Dimension
– Special Recognition for Outstanding Sustainability Initiative: Environmental Dimension
– Best Annual Reports Award 2019: Excellence Award for Small Size Entries

Hong Kong Economic Journal
– Listed Company Award of Excellence 2019 (Main Board – Large Cap)

December
The Chamber of Hong Kong Listed Companies
– Award for Sustainability Excellence

For press enquiries
Strategic Financial Relations Limited
Vicky Lee Tel: 2864 4834 Email: vicky.lee@sprg.com.hk
Christina Cheuk Tel: 2114 4979 Email: christina.cheuk@sprg.com.hk
Corinne Ho Tel: 2114 4911 Email: corinne.ho@sprg.com.hk
Website: www.sprg.com.hk

Champion REIT Announces 2019 Interim Results

– Distributable income grew 7.0%, Distribution per Unit up 6.8%
– Office portfolio was the growth driver and continued to enjoy solid rental reversion
– Improved credit profile by refinancing the existing secured loan with new unsecured loan facilities

Champion Real Estate Investment Trust (stock code: 2778), the owner of Three Garden Road and Langham Place, announces its financial results for the six months ended 30 June 2019.

Overview
For the first half of 2019, Champion REIT recorded solid results with distributable income increasing by 7.0% to HK$869 million and distribution per unit (“DPU”) increasing by 6.8% to HK$0.1335. The growth was achieved against the backdrop of geopolitical volatilities and stagnant economic growth of Hong Kong.

Three Garden Road
Leasing demand was mainly fueled by business expansion of existing tenants, while some occupiers maintained a cautious approach. Three Garden Road continued to sustain solid rental income growth in the first half of 2019, which went up 9.9% to HK$738 million, primarily due to positive rental reversion. The passing rents of the property further increased to HK$105.35 per sq. ft. (based on lettable area). Occupancy was 95.8% as at 30 June 2019.

Langham Place Office Tower
Positioned as a lifestyle hub, demand for Langham Place Office Tower from lifestyle tenants remained solid. While existing beauty tenants continued to show interest in expanding their footprint, new healthcare and medical operators also opted to set up their presence in the property. Total rental income of Langham Place Office Tower went up 10.8% to HK$185 million. The growth was mainly attributable to positive rental reversion with passing rents rising to HK$44.73 per sq. ft. (based on gross floor area). Occupancy stood at a high level of 98.8% as at 30 June 2019.

Langham Place Mall
While Hong Kong retail sales weakened in the first half of 2019, Langham Place Mall’s total rental income went up 2.8% to HK$477 million mainly driven by the growth in base rents from overall positive rental reversion. Tenant sales remained resilient and recorded a mild decrease of 0.6%, compared with 2.6% decrease in Hong Kong retail sales. The Mall maintained 100% occupancy as at 30 June 2019.

Financing
During the first half of 2019, the Trust has drawn new unsecured loan facilities of HK$5,814 million to refinance the secured bank loan maturing in 2019 and to partially repay the secured bank loan due in 2021. The refinancing would enhance the credit profile, where the secured debt portion was lowered significantly to 24.5% as at 30 June 2019. Gearing ratio further reduced to 17.1% due to increase in appraised value of investment properties.

Distribution
For the first half of 2019, the Trust’s distributable income increased by 7.0% to HK$869 million and distribution per unit (“DPU”) increased by 6.8% to HK$0.1335 (2018: HK$0.1250). This represents an annualized distribution yield of 4.3% based on the closing price of HK$6.51 as at 28 June 2019.

Asset Value
The Trust’s investment properties were appraised at a total value of HK$85.6 billion, representing a 3.0% increase from HK$83.1 billion as at 31 December 2018.

Outlook
The global macroeconomic environment is expected to remain unclear in the second half of 2019. Underlined by the US-China trade tensions, recent local protests and other macro factors, both office and retail sectors’ leasing demand will be affected. Nonetheless, given the considerable gap between passing rents and market rents for the office portfolio, positive rental reversion should continue. The Trust will continue to adopt an agile leasing management strategy to drive sustainable growth.

Volatilities in the market may bring viable investment opportunities for the Trust. We will continue to take a prudent approach in evaluating potential opportunities globally in the uncertain market environment.

Media Contacts: Strategic Financial Relations Limited
Vicky Lee Tel: 2864 4834 Email: vick.lee@sprg.com.hk
Christina Cheuk Tel: 2114 4979 Email: christina.cheuk@sprg.com.hk
Website: www.sprg.com.hk