Wharf REIC net profits drops 24%

Its occupancy rates in its Hong Kong and Singapore properties remained high due to steady demand.

Hong Kong-based Wharf Real Estate Investment Company Limited’s (Wharf REIC) underlying net profit decreased 24% to $963.42m (HK$7,477m) at the end of 2020 from the recorded $1261.59m (HK$9,791m) in 2019.

Wharf REIC reported during the 2020 Finals Results Announcement held 4 March that this is inclusive of net Investment Properties revaluation deficit of $1773.64m (HK$13,765 m) and group loss attributable to equity shareholders amounting to $1012.00m (HK$7,854 m). It recorded a basic loss per share of $0.33 (HK$2.59).

This performance was slightly mitigated by the increase in Mainland Development Properties sales recognized by Harbour Centre Development Limited.

The total dividend distribution for 2020 will amount to $0.19 (HK$1.47) per share which represents 65% of the underlying net profit from IP and Hotels in Hong Kong. A first interim dividend of $0.10 (HK$0.78) per share was paid on 2 September 2020, whilst in lieu of a final dividend, a second interim dividend of $0.09 (HK$0.69) per share is scheduled to be paid on 22 April 2021 to shareholders on record as of 25 March 2021.

In its report, the COVID-19 pandemic was noted as a main disruptor to the group’s businesses. This was driven by the drop in visitor arrivals into Hong Kong since February 2020 and the various social distancing measures set in place which affected domestic consumption.

Wharf REIC highlighted that its Hong Kong retail sales dropped 24%. Mall net operation cash flow dropped 36% after rental drop, rent relief, and tripling in marketing expenses were put in place.

A total of $260m (HK$2b) of rent support was extended to retail tenants, majority of it given in the form of base rent.

Meanwhile, its hotel revenue experienced a landslide of 58%, whilst its IP revaluation dropped 5.5%

Wharf REIC also reported on each of their main property markets.

In Harbour City, the overall revenue declined 25% and its operating profit at 29%. In Times Square, the overall revenue decreased 18% and operating profit by 24%. This was mainly attributable to the adverse environment and increased competition in near areas.

For the Central Porfolio, Crawford House and Wheelock Housed have a steady demand from diversified tenants. By end of 2020, office occupancy was 94% and 95%, respectively. On the other hand, its retail premises were fully leased out. In total, revenue for this market increased by 2% and operating profit by 3%.

At Plaza Hollywood, Wharf REIC recorded total occupancy at 95% by year-end. Its revenue decreased 13% to $61.72 (HK$479m) and its operating profit by 19% to $43.29 (HK$336m).

Its Singapore Portfolio was also reported. Wheelock Place’s office tower and retail portion recorded occupancy of 97% and 93% by end of year, respectively, whilst Scott Square mall retail garnered a 91% occupancy.

(US$1 = HK$0.13)

Photo courtesy of Wharf REIC Corporate Communications Department

(L-R: Angela Ng, Investor Relations Manager of Wharf Limited; Stephen Ng, Chairman & Managing Director of Wharf Real Estate Investment Company Limited; Kevin Hui, Director of Wharf Real Estate Investment Company Limited)