An existing Fortune REIT property in Hong KongFortune REIT has indicated that it will use proceeds from the sale of Nob Hill Square to repay existing loans.

Singapore-listed, Hong Kong-focused retail REIT Fortune (SGX:F25U) posted a distribution per unit (DPU) of 10.38 Hong Kong cents for its 1Q 2014, a rise of 15.3% from the corresponding period last year.

Based on the average closing unit price in Singapore and Hong Kong of HKD5.94 as of 31 March 2014, the DPU represents an annualised dividend yield of 7.1%.

The higher DPU came on the back of revenue and net property income (NPI) increasing by 34.0% and 32.7% year-on-year to HKD403.9 million and HKD289.2 million respectively for the quarter.

Management for the REIT has attributed the results to strong rental reversions, returns from completed asset enhancement initiatives (AEIs) and additional income contributions from Fortune Kingswood, which was acquired in October 2013.

Portfolio occupancy for the REIT was 99.3% as at 31 March 2014, the highest level in more than three years, while rental reversion for renewals in 1Q2014 climbed to 26.5%, driven by strong rental growth at Fortune Kingswood.

Fortune REIT’s gearing stands at 32.9% as at 31 March 2014.

Units of the REIT closed the trading day 0.32% lower at HKD6.22 on the Singapore Exchange.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.