HONG KONG, Aug 15, 2023 – (ACN Newswire via SEAPRWire.com) – Yuexiu Real Estate Investment Trust (“Yuexiu REIT”, together with Yuexiu REIT Asset Management Limited, collectively known as the “REIT”; stock code: 405) announced its interim results for the six months ended 30 June 2023.
2023 Interim Results Summary:
– Overall operation grew steadily, with total revenue of RMB1,061 million, representing a 12.4% year-on-year increase.
– Distribution of approximately RMB0.0541 per unit, equivalent to approximately HK$0.0590 for the period. This represents an annualized distribution yield of 7.07%.
– As at 30 June 2023, the overall occupancy rate of the properties was approximately 84.0%.
Guangzhou International Finance Center (GZIFC):
– Tapped into potential demand for offices and attracted well known enterprises, enriching business types, attracting customer traffic and organizing promotions for the shopping mall.
– Interim operating revenue of the GZIFC complex was RMB503.8 million, accounting for 47.4% of the REIT’s total revenue.
– GZIFC is committed to building a medium-to-long-term stable tenant structure, and the proportion of high-quality tenants increased by 2.9%, with an average renewal period of four years and a 2.7% increase in renewed rent.
– With precise investment in promotional activities to facilitate business operations, GZIFC Shopping Mall recorded a year-on-year increase of 24% in customer traffic and a year-on-year increase of 13% in sales in the first half year.
– Overall performance of the hotel and serviced apartments rebounded significantly and continued to set benchmarks for the market. Four Seasons Hotel and Ascott Serviced Apartments saw year-on-year increases in their average occupancy rates and average room rates.
Yuexiu Financial Tower:
– Securing high-quality tenants and expediting business solicitation.
– Yuexiu Financial Tower posted an operating revenue of approximately RMB200.2 million, representing 18.9% of the REIT’s total revenue. Occupancy rate stood at 89.1%.
– Top 100 central enterprises and industry leaders were successfully introduced, thereby further stabilizing the high-quality tenant base.
Active optimization of debt structure and effective reduction of financing cost
– Completed the issuance of the first tranche of RMB1.5 billion Shanghai Free Trade Zone Bonds with a coupon rate of 4.15% in March for the repayment of matured debt. To ensure effective control of liquidity risk, withdrew the first tranche of RMB1.5 billion of the RMB4 billion cross-border direct loans in June to refinance the maturing financing during the year in advance.
– Taking advantage of the spread window of the domestic and offshore financing cost, the REIT replaced the existing offshore foreign currency financing with RMB loans, thereby reducing the overall financing cost. Interest rate exposure is expected to drop to 48% upon completion of the loans replacement. At the end of June 2023, the REIT’s average financing cost was 4.90%, representing an increase of 7 basis points from 4.83% at the end of 2022.
Yuexiu REIT Asset Management Limited (the “Manager”) has declared a distribution of approximately RMB0.0541 per unit, equivalent to approximately HK$0.0590 (2022 first half: approximately RMB0.0734 which was equivalent to HK$0.0853) to unitholders for the 2023 Interim Period. Based on the closing price of HK$1.67 per unit as at 30 June 2023 (closing price as at 30 June 2022: HK$3.06), the yield is approximately 3.54% (2022 first half: 2.79%). This represents an annualized distribution yield of 7.07%.
Mr. LIN Deliang, Chairman, Chief Executive Officer and Executive Director of Yuexiu REIT, said: “In the first half of 2023, Yuexiu REIT adhered to innovation and change and strived to achieve long-term commercial value in the face of various post-pandemic economic challenges. By focusing on leisure consumption, the hotels and apartments’ overall operations have returned to the pre-pandemic levels; customer flow in the retail shopping malls have recovered and grown steadily; the operations of specialized wholesale market has steadily recovered; and the office buildings’ performance remained stable in the declining demand market. Yuexiu REIT is committed to creating good results for unitholders.”
Guangzhou International Finance Center (GZIFC)
GZIFC is committed to building a medium-to-long-term stable tenant structure, and the proportion of high-quality tenants increased by 2.9%. During the first half year, it focused on tapping into the demand of existing high-quality tenants for expansion of lease area. Meanwhile, by utilizing various resources, top-notch professional services and financial companies were successfully introduced. In the face of intense competition for customers, GZIFC actively retained high-quality tenants and renewed their leases, with the renewal rate of key tenants reaching 100% in the first half year. Well-known tenants such as Societe Generale, Bank of Taiwan and Mango TV renewed their leases with an average renewal period of four years and an increase of 2.7% in the renewal rent.
The GZIFC Shopping Mall introduced Taishen, the first Southeast Asian cuisine brand from Chang Lai Catering Group, and Gyen Hutong, a high-quality barbecue chain brand. Together, these brands helped to increase the per customer transaction of catering tenants and laid the foundation for introducing restaurants listed in the Michelin Guide and the Black Pearl Restaurant Guide. In addition, the Mall introduced its first cha chaan teng (Hong Kong style restaurant), Tang-dao, and the first Korean restaurant featuring rice mixed with soup, FUSION. The result is an optimized catering mix on the B1 floor to better meet the needs of CBD white-collar workers by offering quality and convenient meals. A normalized coordination mechanism has been substantially established to integrate resources of various business formats and attract traffic in a targeted manner. With precise investment in promotional activities to facilitate business operations, the Mall recorded a year-on-year increase of 24% in customer traffic and a year-on-year increase of 13% in sales in the first half year.
Capitalizing on demand from the leisure tourism market during the Spring Festival and Labour Day holidays, as well as opportunities brought by the resumption of large-scale exhibitions, Four Seasons Hotel actively developed the foreign customers market. In the first half of 2023, the average occupancy rate of the Hotel was 79.5%, representing a year-on-year increase of 26.9 percentage points. The average room rate was RMB2,202, a year-on-year increase of 41.3%. Over the same period, the average occupancy rate of Ascott Serviced Apartments reached 90.3%, representing a year-on-year increase of 6.1 percentage points. The average room rate was RMB1,101, a year-on-year increase of 10.7%.
Yuexiu Financial Tower
During the first half year, Yuexiu Financial Tower completed the lease renewal of approximately 20,000 sq.m., with the overall lease renewal rate reaching 86.1%, the key tenants renewal rate reaching 94%, and renewal rent increasing by 6%, enabling a more stable lease structure and growth in rental income. Customized renovation services were provided to cater for the needs of prospective tenants, and the renovated units recorded a high sell-through rate of 92%, which greatly enhanced product competitiveness, promoted the conversion rate of business solicitation and improved customer satisfaction.
White Horse Building
White Horse Building capitalized on the market recovery to expedite business solicitation and conversion, and introduced customer group from the key market to settle in. In the first half of 2023, newly contracted area totaled 9,183 sq.m., and the occupancy rate increased by 9.2 percentage points to a level above 90% compared with the end of 2022. White Horse Building innovated its marketing model, improved its operational supporting capabilities, and took the initiative to seek and utilise government resources to expand media exposure and further strengthen its industry influence.
Fortune Plaza and City Development Plaza
Targeting business customers, these two projects implemented product transformation to enhance their competitiveness, with the current sell-through rate of renovated units reaching 78.3%, effectively promoting business solicitation and leasing. In the first half year, Fortune Plaza successfully engaged its existing tenant, zhenai.com, to expand its lease area. The Plaza also renewed leases with tenants such as Master Meditech and Cambodia Airways, and introduced a number of enterprises including Nuoxun Human Resource and Egypt TEDA, thus continuing to optimize the tenant structure. In May, City Development Plaza successfully introduced a high-quality customer, Pufanglimin, to take up the units on the 26th floor, seamlessly transitioning the area for which the lease was previously terminated.
Leveraging on brand marketing and resource coordination, Victory Plaza recorded a year-on-year increase of 38% in the mall’s customer flow, and a 22% year-on-year increase in sales in the first half year, while its anchor customer, Uniqlo, recorded a year-on-year increase of 19% in sales during the same period. The Plaza proactively managed operating risks by removing high-risk customers which previously occupied an area of approximately 350 sq.m., and seamlessly introduced two high-quality, emerging brands in the first half year, resulting in an increase of 17.6% in the first-year rent of new contracts. In addition, Uniqlo’s lease was renewed in advance to stabilize the project’s operation.
Shanghai Yue Xiu Tower
Shanghai Yue Xiu Tower implemented flexible leasing policies, creating customized renovated units to enhance customers’ office experience. In the first half year, newly contracted area increased by 5% year-on-year to 1,200 sq.m., while the renewed leasing area reached 3,000 sq.m., greatly contributing to its stable customer resources.
Yuexiu Fortune Centre improved on its business solicitation strategies. In terms of product optimization, new, small and medium-sized units were provided by way of capital renovation, enriching the range of products offered to customers. In terms of new contracts, the Centre catered for demands from existing high-quality customers (such as Guangxin Communication) for expansion of leased areas, securing over 10,000 sq.m of newly contracted space during the first half year. In terms of lease renewals amidst the challenging market environment, high-quality customers such as Prolog, AVIVA-COFCO and New China Life and Midea completed their lease renewals, covering an area of 12,300 sq.m.
In the first half of the year, Starry Victoria Shopping Centre entered into contract with 11 brands, with a contracted area of nearly 4,000 sq.m., thus promoting the overall business image and quality of Hall A. With a view to assist tenants in stabilizing their operations, the Centre carried out marketing activites with carpark support for tenants who bore high rents. Management of lease renewal was strengthened, and a high renewal rate of 81.8% in the first half year was achieved, with an increase of 24.2% in effective rents during the contract period. Tenants which are engaged in diversified operations, such as Muji, were also introduced to complement the existing range of tenants and enrich the business atmosphere of the shopping mall.
Hangzhou Victory strengthened its lease management and actively renewed the expiring lease area, successfully introducing a top enterprise, 100 Million Mainstay Companies, to the portfolio, which leased two entire floors with a total area of 2,500 sq.m. Lease renewal for an enterprise related to the China Railway Group on the seventh floor was successfully completed, with an increase of 4.9% in the effective rent of the renewed lease. The overall occupancy rate of the building increased by 5.8 percentage points year-on-year to 99.2%.
Facing the challenges of the slow recovery of the post-pandemic economy and the uneven recovery paces across industries, the Manager will remain committed to elevating operational capabilities, optimizing the business model, enhancing product competitiveness, vigorously stabilizing business and attracting investment, providing omni-channel development of tenant resources, and further stabilizing the base of high-quality tenants. The Manager will also continue to explore financing opportunities in the capital market, effectively reduce financing costs, and so as to bring stable returns to unitholders.
About Yuexiu Real Estate Investment Trust
Yuexiu Real Estate Investment Trust (“Yuexiu REIT”) was listed on the Hong Kong Stock Exchange of Hong Kong Limited on 21 December 2005 and is the first listed real estate investment trust only investing in properties in the People’s Republic of China (the “PRC”) in the world. The current property portfolio comprises ten high quality properties, namely Guangzhou International Finance Center, White Horse Building, Fortune Plaza, City Development Plaza, Victory Plaza, Yuexiu Financial Tower in Guangzhou, Yuexiu Tower in Shanghai, Wuhan Properties in Wuhan (including Wuhan Yuexiu Fortune Centre and Starry Victoria Shopping Centre), Victory Business Centre in Hangzhou and Yuexiu Building in Hong Kong, with a total area of ownership of approximately 1.184 million sq.m. All properties are located in the central business district of Guangzhou, Shanghai, Wuhan, Hangzhou and Hong Kong respectively. The categories of the properties include Grade-A offices, commercial complexes, retail business, hotel, serviced apartments and professional clothing market etc.
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