Industrial building has the potential to activate more value rent
The average person looks at REITs and concentrates on Grade A office buildings or shopping malls. Industrial buildings are often overlooked. As the government encourages the activation of industrial buildings, such as the wealth of REITs with industrial buildings, there will be another potential.
One of the seven properties owned by Prosperity REIT (00808) is an industrial property (Xinbao Center). Management expects that warehouse and factory rents will increase, and the growth trend may continue until 2022. What the first brother should pay attention to is that in addition to the increase in rents, Yan Fu pointed out that rents will also drive up the value of properties in the next few years. The valuation of the property has risen, and the unit price of the fund has also risen. It is expected that the industrial building revitalisation plan will have a positive impact on the industrial property market in Hong Kong, which will offset any negative impact of the trade war.
For REITs, the quality of the property is also critical. The more quality properties, the stronger the income and property valuation. There are three Grade A office buildings in Fu Fu, including the Metropolis Building, Millennium Plaza, and the 9th Street. Grade A office buildings accounted for 61.2% of the overall property portfolio. Yan Fu said that rents in Kowloon will remain stable as a new Grade A office building in Kowloon East can be used as an alternative to relocation or integration.
Management: Industrial building rental growth continued until 2022
In addition to quality properties in hand, a REIT will continue to renovate the property in order to secure a better rental value. We also continue to develop and implement asset enhancement initiatives through asset enhancement, and we have continued to develop and implement asset enhancement initiatives. For example, last year we completed a number of asset enhancement projects at Metro Tower, Yan Fu Plaza and Qian Fu Industrial Millennium Plaza. The initiative will continue to be carried out between property portfolios.
The occupancy rate is 98%
The property rental rate of the company has also continued to perform well. The occupancy rate has been above 95% since 2006 and 97.6% last year. Last year, the overall property portfolio recorded a 7.2% increase in rent.
DBS is positive about the long-term profit growth potential of the company, especially in Kwun Tong District. As a result of the introduction of more high-income commercial tenants in the property, it is expected to increase the rental value. At the same time, the 2019 lease expiration rate will reach 36.5. %, it is estimated that the new lease has a continuous increase in the number of rents in the number of units, which will help support the increase in rental income.
DBS estimates that the income of 泓Fujin and next year will increase by 6% and 4% year-on-year, and the distributable income will increase by 3% and 4%, and the distribution per unit will increase by 2% and 3%.
According to Bloomberg’s comprehensive forecast, the interest rate of 泓Fujin and next year is 5.6 percent, which is an attractive level.
In a word, the property of a REIT is good enough and can be continually refurbished, and the rental value can be steadily improved. If there is an industrial property in the portfolio, it will be more effective to activate the policy of the industrial building. The property portfolio, with an interest rate of over 6%, is even more offensive and defensive.