Excellent rate of 5.5%, high renting capacity
The market is expected to increase interest rates in the United States, and the funds are pursuing high-yield stocks. Among them, the wealthy industry trust (00808), which belongs to the Changhe Department, hit a 52-week high of 3.48 yuan yesterday.
Different from the same family of Fortune REIT (00778) (mainly in Hong Kong shopping malls) and Huixian Property Trust (87001) (mainly based on Chinese properties), Yan Fu holds Hong Kong’s non-core commercial district office buildings and industrial buildings. Although the property is not the most advanced, it is located in the urban area, the traffic is quite convenient, the facilities are complete, and many areas are gradually developing into mature commercial areas, which has kept rents rising for many years. The company has seven properties, including three Grade A office buildings, one commercial property, two industrial and commercial properties and one industrial property.
The Group’s revenue rose 0.1% to 450 million yuan last year. The net property income fell 0.8% to 350 million yuan. The distributable income rose 2.8% to 270 million yuan. The distribution per unit of the fund rose 1.7% to 0.181 yuan. The yield is 6%.
During the period, the average rent of the average unit of the property portfolio rose by 1.5% to 24.68 yuan per square foot. The occupancy rate was 97.6% of the high level, and the cost-to-income ratio rose by 0.7 percentage points to 21.5%. The gearing ratio decreased by 0.9 percentage points to 20.6%.
Zhao Guoxiong, chairman of the board of directors, said that the impact of the individual tenants of the Hung Hom Metropolis Building and the sale of Hai Ming Xuan in 2017 led to a slight decline in property income last year. The largest revenue contribution was the Hung Hom Metropolis Building with a revenue of 1.26 billion yuan.
Zhao Guoxiong said that most of the funds sold by Haimingxuan were used to pay off debts. The current debt ratio fell to 20.6%, reaching a stable level, and debt repayment was due to fears that the US interest rate increase would increase the financial cost, so as not to affect the dividend payout. After paying off some of the debt, there is still cash on hand, and all of the properties have been released from the mortgage, and there is no plan to sell the property.
Zhao Guoxiong: Rent increase is double digit
Zhao Guoxiong pointed out that the current real estate market is at a peak, and it is necessary to wait for the right time to have an acquisition. The Group’s rents rose by 7.2% last year, which is an ideal level. At present, there is still a shortage of office space in Hong Kong. Although the supply of office buildings in Kowloon East is slowly increasing, the occupancy rate of the Group is still high, and there is a capacity for fare increase. The bargaining power is better than that of the new building. The target is double digits.
Bloomberg’s comprehensive brokerage forecast predicts that the interest rate of the company will stabilize at 5.5% in the next two years, and investors may wish to wait for low-end investment.