Investor FAQs

Total rental income rose by 14% for the six months ended December 31, 2011 with rental income generated from our Hong Kong and Mainland China operations up 7% and 23% respectively, compared to a year ago. Hong Kong rental income currently contributes approximately 52% of total rental income.

Rental income from our retail properties increased by 19% benefiting from our continuous optimization of tenant mix, and accounted for about 62% of total rental income. Rental income generated from our retail properties in Hong Kong and Mainland China grew 7% and 30% respectively.

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We sold 2 sea-view units of The HarbourSide and generated sales proceeds of HK$193 million. On average, these sales achieved a profit margin of 78% or unit price of about HK$44,000 per square foot.

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Parc 66 is our second new shopping mall completed outside of Shanghai. It has a total gross floor area of about 171,000 square meters and we are confident of achieving an initial rental return of 7% on our unleveraged investment cost in the first full year of operation.

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Palace 66 recorded 15% rental income growth for the six months ended December 31, 2011, compared to a year ago. The improvement was resulted from our continuous tenant refinement in re-positioning the mall. This property now generates a gross rental return on unleveraged investment cost of about 5%.

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We have completed our two committed projects on the Mainland- - Palace 66 in June 2010 and Parc 66 in August 2011. The third project due for completion is Forum 66 in 4Q 2012, our second shopping mall in Shenyang. We have started pre-leasing activities for Forum 66. Over 70% of leasable area has already been committed as of December 31, 2011. We are confident of achieving a 7% gross rental return on unleveraged investment cost in the first full year of operation.

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Our strategy for investment on the Mainland is for long-term yield enhancement and capital appreciation. We invested in Shanghai about nineteen years ago and have two very successful rental properties, Plaza 66 and Grand Gateway 66, which have a total gross floor area of about 500,000 square meters. These two properties currently generate a gross rental return on unleveraged investment cost of about 37%.

About eight years ago, we embarked on our new Mainland strategy to expand to second tier cities on the Mainland. We acquired eight prime sites in Tianjin, Shenyang, Wuxi, Jinan, Dalian and Kunming between 2005 and 2011. Total gross floor area of these projects amounts to about 2.3 million square meters.

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As of December 31, 2011, we have five upcoming commercial projects in five cities on the Mainland and the details are summarized in the table below:-

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With the benefits of continued economic reform, many Chinese cities with population of about 5 million other than Shanghai, Beijing, Guangzhou and Shenzhen are poised for economic take-off. We expect disposable income to rise and consumer spending to increase for these cities. Our strategy to invest in commercial projects enables us to capitalize on the growing consumer spending trend on the Mainland.

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We have cash and bank deposits of about HK$24 billion as of December 31, 2011. We will maintain our discipline and stringent criteria towards new land acquisitions. Moreover, our ample war chest enables us to capture purchase opportunities where deemed appropriate.

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We are in net cash position and have cash and available facilities of about HK$45 billion, including Medium term notes program of US$2 billion, as of December 31, 2011. In addition, we have as much as HK$20 billion worth of housing in Hong Kong to be sold. Moreover, the present close to HK$6 billion annual rents should increase nicely over time, and so our overall financial position should remain healthy.

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As of December 31, 2011, we have 1,539 residential units available for sale comprising mainly 282 units of The HarbourSide and 1,234 units of The Long Beach. We shall continue our policy to release the properties into the market at the best possible time to maximize the property development profit margins.

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We aim at maintaining a stable dividend each year and look to increase it as there is an increase in the company’s profits.

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