Fortune Reit Q2 distributable income up 13.5%

July 30, 2008
Fortune Reit Q2 distributable income up 13.5%

FORTUNE Real Estate Investment Trust, which owns 11 Hong Kong malls,
has posted distributable income of HK$79.4 million (S$13.8 million)
for the second quarter ended June 30, 2008, up 13.5 per cent from the
corresponding year-ago period.

The latest Q2 bottomline included HK$21.9 million non tax-exempt
income, which referred mainly to interest income from fixed deposits
and structured swaps entered on June 28, 2006. 'Included therein for
the period 1 April 2008 to 30 June 2008 is a positive fair value of
HK$16.6 million (1 April 2007 to 30 June 2007: Nil) as well as the
value of HK$5.02 million for the unwinding of one of the structured
swaps,' the trust said in its results statement.

Total revenue rose 2.8 per cent year-on-year to HK$156.6 million in
Q2, while net property income increased 2 per cent over the same
period to almost HK$115 million.

For the six months ended June 30, 2008, Fortune Reit's net property
income was flat at around HK$229 million, while total revenue inched
up 0.2 per cent to HK$308.9 million. Distributable income rose 5.3
per cent to HK$150.9 million.

Unitholders will receive a tax-exempt distribution per unit of 18.51
HK cents for the half-year ended June 30, 2008. That works out to an
annualised distribution yield of 8.2 per cent based on Fortune Reit's
HK$4.54 closing price on June 30.

Fortune Reit was last traded on Monday (July 28), when it closed at
HK$4.31, down five cents from the Friday closing.

Its net asset value per unit (excluding hedging reserves) slipped 2
HK cents to HK$9.02 as at June 30, 2008, from HK$9.04 as at Dec 31,
2007.

Fortune Reit currently has 11 malls - many of which are in the New
Territories - worth about HK$9.7 billion, against five malls worth
HK$3.3 billion when the trust was listed in 2003.

The trust's manager, ARA Asset Management (Singapore) Ltd,
said: 'Asset enhancement initiatives to improve revenue and shopping
experience are in progress with the major initiatives at City One
Shatin Property, Household Center and Smartland, to refine the
physical enhancements and tenant mix.'

It also noted that the trust's low gearing of 23.4 per cent 'provides
management with debt flexibility of about HK$1.8 billion for
opportunistic acquisitions, before a credit rating and before the
statutory borrowing limit of 35 per cent is reached'.