ARA Asset Management (Singapore), the manager of Fortune Real Estate Investment Trust (Fortune REIT), says total revenue and NPI in FY09 grew by 10.1% and 6.8% year-on-year to HK$701.4 million ($127 million) and HK$494.7 million respectively for the quarter (4Q09) and year ended Dec 31 2009 (FY09).

Accordingly, distributable income reached a record high of HK$337.8 million, increased by 11.6% over FY08. ARA Asset Management says the better performance was due to the income contribution from the three new assets acquired on Oct 15 2009, higher rental revenue from the existing eleven malls as well as a lower borrowing cost for FY09. For the period from July 1 2009 to Dec 31 2009, Fortune REIT will pay out 10.60 Hong Kong cents per unit on Feb 26 2010, bringing the total DPU payout to 30.20 Hong Kong cents for the FY09.

As at Dec 31 2009, the portfolio occupancy improved to 96.4% from 93.1% as at Sept 30 2009. Nine out of the 14 malls, including the three newly acquired properties, achieved 100% occupancy as at year end. A modest rental reversion of 4.2% was recorded for renewals in FY09.

Fortune REIT’s portfolio were valued at HK$11.5 billion as of Dec 31 2009, representing an overall increase of 4.8% over the valuation as of June 30 2009. All the 14 properties recorded revaluation surpluses, reflecting the recovery of retail market in Hong Kong and the improvement in Fortune REIT’s asset performance.

Due to the low interest rate environment, borrowing costs for FY09 amounted to HK$88.2 million, 12.5% lower than last year, with an effective interest cost of 3.56%.

Fortune REIT now has a stronger balance sheet with no refinancing needs until 2013. With a low gearing of 23.7% and HK$2.2 billion worth of unencumbered assets, Fortune REIT is well-positioned to grow its asset base by being able to respond quickly to acquisition opportunities.

ARA Asset Management says Fortune REIT, which invests in suburban retail properties that mainly cater for the daily necessity needs of the nearby residents, says it will continue to benefit from the economic recovery in Hong Kong.