Champion Real Estate Investment Trust (stock code: 2778), the owner of Three Garden Road and Langham Place, announces its financial results for year ended 31 December 2023.
Summary of financial results
FY 2023
FY 2022
Change
Total Rental Income (HK$ million)
2,312
2,359
-2.0%
Net Property Income (HK$ million)
1,946
2,031
-4.2%
Distributable Income (HK$ million)
1,122
1,298
-13.6%
Distribution per unit (HK$)
0.1683
0.1954
-13.9%
31 Dec 2023
31 Dec 2022
Change
Gross Value of Portfolio (HK$ million)
62,950
63,555
-1.0%
Net Asset Value per unit (HK$)
7.72
7.91
-2.4%
Gearing Ratio
22.8%
22.5%
+0.3 pp
Overview
The return of tourists following full border reopening in 2023 helped revive the Hong Kong retail market. Although the overall tourism and consumer demand still lagged behind the pre-COVID levels, the Trust’s retail rental income has shown satisfactory growth due to improved footfall and tenants’ sales. However, Hong Kong office leasing remained sluggish as occupiers continued to be cost cautious. Rental income of the Trust slightly decreased by 2.0% to HK$2,312 million. Net property income of the Trust decreased by 4.2% to HK$1,946 million. The high interest rate environment resulted in a surge in cash finance costs by 41.3% to HK$590 million. The Trust recorded a drop in distributable income by 13.6 % to HK$1,122 million and distribution per unit (“DPU”) declined 13.9 % to HK$0.1683.
Three Garden Road
While we saw a rise in the number of enquiries after the full border reopening, the overall leasing momentum for the Central office market remained slow in 2023. Despite challenging market environment, occupancy of Three Garden Road maintained at stable level of 82.8% as at 31 December 2023. Rental income dropped to HK$1,222 million (2022: HK$1,346 million) as a result of negative rental reversion. In addition to the completion of a comprehensive lift modernisation project to improve the efficiency of elevators, new electric vehicle chargers were installed to further enhance amenities and accommodate an increasing number of electric vehicles in Hong Kong.
Langham Place Office Tower
Demand from the healthcare and beauty segments for establishing new operations in Langham Place Office Tower continued. Occupancy of the property remained stable at 93.3% as at 31 December 2023. Lifestyle tenants continued to be the major occupiers of the property, accounting for 74% of the area as at 31 December 2023. Rental income declined 3.7% to HK$350 million (2022: HK$363 million).
Langham Place Mall
The overall Hong Kong retail market recorded satisfactory recovery in the post pandemic era with total retail sales increased by 16.2% in 2023. Langham Place Mall achieved an above-market average performance with tenants’ sales growing significantly by 50.5%, thanks to the strong recovery in the beauty segment following the full border reopening. The total rental income of the mall increased by 13.9% to HK$740 million (2022: HK$650 million). Occupancy of the mall stood at 98.6% as at 31 December 2023 due to tenant turnover.
Distribution
Distributable income of the Trust dropped 13.6% to HK$1,122 million (2022: HK$1,298 million) and DPU dropped 13.9% to HK$0.1683 (2022: HK$0.1954). Based on the closing unit price of HK$2.45 recorded as at 29 December 2023, the total DPU represented a distribution yield of 6.9%.
Asset Value
The appraised value of the Trust’s property portfolio was HK$62.9 billion as at 31 December 2023, declining 1.0% from HK$63.6 billion as at 31 December 2022.
Sustainability
Our initiatives around climate resilience, stakeholder engagement and community well-being foster a strong and inclusive environment. Langham Place Office Tower’s attainment of BEAM Plus Existing Building Platinum Certification is another accomplishment in reaching our 2030 green building targets. During the year, we launched the first ESG Forum and encouraged our tenants to join the “Green Champion Challenge” in energy and waste reduction. We strive to promote a balanced and sustainable lifestyle among our staff, tenants and music lovers through engaging them in initiatives such as the waste-to-farm-to-table project, Christmas social enterprise pop-up market and the flagship “Musica del Cuore” classical concerts.
Outlook
Despite that the uncertainties in the outlook of the global economy in 2024 against the backdrop of geopolitical tensions and wars in certain regions, the moderation of inflation and potential interest rate cuts could ease the pressure on commercial real estate valuation and interest expenses. For the domestic retail market, the strong local currency may hinder the growth this year following a solid recovery in 2023. We will continue our efforts in optimising the rental income of the properties portfolio and managing the risks under the challenging market conditions.
Photo 1 – (Left) Ms. Christina Hau, Chief Executive Officer & (Right) Ms. Amy Luk, Investment and Investor Relations DirectorPhoto 2 – Ms. Christina Hau, Chief Executive Officer
About Champion REIT (stock code: 2778)
Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade A commercial properties in prime locations. It currently offers investors direct exposure to nearly 3 million sq. ft. of prime office and retail floor area. These include two Hong Kong landmark properties, Three Garden Road and Langham Place, as well as a joint venture stake in 66 Shoe Lane in Central London.
Champion Real Estate Investment Trust (stock code: 2778), the owner of Three Garden Road and Langham Place, announces its financial results for the six months ended 30 June 2023. Overview The full reopening with mainland China and a new round of the government’s Consumption Voucher Scheme helped revive the Hong Kong retail market in the first half of 2023. While a return of tourists boosted the footfall and tenants’ sales, the number of arrivals was still below pre-pandemic levels. The Hong Kong office market remained challenging in the first half due to geopolitical tensions and a softening global economy. Results of the Trust continued to be impacted by the leases committed during the pandemic and the increase in interest expense during the reporting period. Distributable income dropped 12.3% to HK$ 617 million (2022: HK$704 million) and distribution per unit (“DPU”) dropped by 12.6% to HK$0.0927 (2022: HK$0.1061).
Three Garden Road The occupancy of Three Garden Road was relatively stable in the first half of 2023 and an anchor tenant in the financial sector expanded its operations in Three Garden Road. Occupancy of the property was 82.2% as at 30 June 2023. Total rental income of the property lowered to HK$627 million (2022: HK$689 million).
Langham Place Office Tower Rental income slightly decreased to HK$174 million (2022: HK$181 million). Occupancy of the property remained stable at 93.2% as at 30 June 2023. Lifestyle tenants remained the major segment of the property, representing 73% of the tenants mix as at 30 June 2023.
Langham Place Mall The recovery of tourist spending and growth in domestic consumption delivered a remarkable growth of 66.3% in tenants’ sales of Langham Place Mall, outperforming the overall Hong Kong retail sales which increased by 20.7% in the first six months of 2023. The substantial above-market performance of the mall was largely attributable to the considerable growth in the beauty sector. Although occupancy of the property receded to 95.0% as at 30 June 2023 due to the time gap in tenant turnover, all the unoccupied areas had been committed. The total rental income of the mall grew 12.3% to HK$366 million (2022: HK$326 million).
Distribution Distributable income of the Trust dropped 12.3% to HK$617 million (2022: HK$704 million) and DPU dropped by 12.6% to HK$0.0927 (2022: HK$0.1061). Based on the closing unit price of HK$2.84 recorded as at 30 June 2023, the total DPU represented a distribution yield of 6.5%.
Asset Value The appraised value of the Trust’s property portfolio was HK$63.1 billion as at 30 June 2023, declining 0.7% from HK$63.6 billion as at 31 December 2022.
Sustainability We made significant progress towards our 2030 Environmental, Social, and Governance (“ESG”) targets and 2045 Net Zero Commitment. In addition to pursuing international green building standards, we also step up our sustainability efforts by adding more electric vehicle charging stations. Our inaugural ESG Forum provided opportunities for exchange among our stakeholders to facilitate a greener transition. We also launched the innovative Green Champion Challenge to encourage tenants’ involvement in combating climate risks. Other wellness events include International Women’s Day celebration, Love Play Farm project and Musica del Cuore musical concerts. Furthermore, we have arranged a total of HK$1,000 million of sustainability-linked credit facilities during the reporting period.
Outlook The growth momentum for retail sales may slow down a bit in the remaining part of this year following a strong rebound in the first half, because of the relatively higher base in the second half of last year. We stay cautiously optimistic of the retail market outlook as the number of tourists picked up gradually. On the other hand, we remain cautious on the outlook for Central office in view of the rising availability in the district and uncertainties in the global economy. Retaining tenants and occupancy will remain a priority for the property.
The overall operating environment of the Trust will remain challenging under the uncertain global economic situations. Facing the high interest rate environment, we will look for an optimal market window to increase the fixed rate portion. We will continue to look for opportunities in a prudent manner for the long-term growth of the Trust.
About Champion REIT (stock code: 2778) Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade A commercial properties in prime locations. It currently offers investors direct exposure to nearly 3 million sq. ft. of prime office and retail floor area. These include two Hong Kong landmark properties, Three Garden Road and Langham Place, as well as a joint venture stake in 66 Shoe Lane in Central London. Since 2015, the Trust has been included in the Constituent of Hang Seng Corporate Sustainability Benchmark Index of Hang Seng Indexes. Website: www.championreit.com
Champion Real Estate Investment Trust (“Champion REIT” or the “Trust”) (Stock Code: 2778), owner of Three Garden Road and Langham Place, hosted its inaugural ESG Forum, with the theme “Championing Shared Values and Greater Resilience”, marking an important milestone in the Trust’s Net Zero and sustainability journey.
Distinguished guests participate in the kick-off ceremony of Champion REIT’s Net-Zero journey.
Champion REIT has received tremendous support from a diverse group of over 150 participants from various industries and sectors. This event aimed to provide a platform for participants to engage in dialogues on two pressing topics: 1) transitioning to a Net Zero future, and 2) promoting diversity and social inclusion.
The Trust was delighted to invite industry experts to share their insights through the climate panel “Journey to Net Zero: Aligning Business and Environment Decisions for Green Transition”. These included Mr Davis Bookhart, Director, Sustainability/Net-Zero Office of The Hong Kong University of Science and Technology, who served as moderator for the panel, and Ms Jenny Yeung, Vice President, Citi Realty Services, Citi Hong Kong; Ms Maria Cheung, Chief Executive of Fair Trade Hong Kong; Ms Michelle Leung, APAC ESG Senior Analyst, Bloomberg LP and Ir Norman Cheng, Chairman of the Hong Kong Waste Management Association.
The Trust was honoured to have Ms Minnie Soo, an Olympic bronze medallist in table tennis, as a distinguished guest for the social keynote presentation. Ms Soo shared her valuable insights and experiences, featuring how fair play in sports regardless of background which truly demonstrates diversity and inclusion. The forum was well attended by tenants of Three Garden Road and Langham Place, as well as ESG practitioners and business partners.
The Trust also announced the launch of the “Green Champion Challenge”, which is an incentive-based initiative designed to encourage office tenants’ involvement in energy and waste reduction, with the goal of co-creating positive environmental impacts. Additionally, Fair Trade Hong Kong, one of the most trusted sustainability labels in the world, was the strategic partner of the forum. A Fair Trade Bazaar, tailor-made special drinks and light refreshments were hosted to introduce fair trade and ESG principles.
Ms Christina Hau, Chief Executive Officer of Champion REIT, said, “The forum marks a momentous occasion for the Trust to connect all involved for creating shared values. It also offers an opportunity for us to strengthen old bonds and forge new connections with like-minded people who share our ESG commitment to foster the sustainable ecosystem for all.”
About Champion REIT (Stock Code: 2778) Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade A commercial properties in prime locations. It currently offers investors direct exposure to nearly 3 million sq. ft. of prime office and retail floor area. These include two Hong Kong landmark properties, Three Garden Road and Langham Place, as well as joint venture stake in 66 Shoe Lane in Central London. Since 2015, the Trust has been included in the Constituent of Hang Seng Corporate Sustainability Benchmark Index of Hang Seng Indexes.
Website: https://www.championreit.com/
For press enquiries: Strategic Financial Relations Limited Vicky Lee Tel: 2864 4834 Email: vicky.lee@sprg.com.hk Christina Cheuk Tel: 2114 4979 Email: christina.cheuk@sprg.com.hk Roy Ng Tel: 2114 4950 Email: roy.ng@sprg.com.hk Website: www.sprg.com.hk
Champion Real Estate Investment Trust (stock code: 2778), the owner of Three Garden Road and Langham Place, announces its financial results for year ended 31 December 2022. Overview The local market sentiment gradually improved as COVID-19 moderated throughout the year. Nevertheless, the global economy in 2022 was marked by rising interest rates and inflation which dampened consumer sentiment and raised borrowing costs. The severe fifth wave of COVID-19 in the first quarter caused considerable interruptions for our tenants as well as the overall leasing momentum of our properties. Champion REIT recorded a drop in distributable income by 13.6% to HK$1,298 million and distribution per unit (“DPU”) declined 14.0% to HK$0.1956.
Three Garden Road Three Garden Road recorded a shrank of the rental income by 7.8% to HK$1,346 million in 2022 (2021: HK$1,460 million). Occupancy of Three Garden Road was 82.7% as at 31 December 2022 due to downsizing and relocation of tenants in the financial industry.
Langham Place Office Tower Total rental income of the property was relatively stable at HK$363 million (2021: HK$365 million). Occupancy of the property was 93.3% as at 31 December 2022. Lifestyle tenants remained a mainstay among the new occupiers, accounting for 71% as at 31 December 2022.
Langham Place Mall Full year tenants’ sales went up 8%, outperforming the overall Hong Kong retail sales which dropped by 0.9% in 2022. The beauty segment recorded an encouraging growth, contributing to a 210.4% increase in turnover rent portion to HK$117 million. The total rental income of the property went down 3.1% to HK$650 million (2021: HK$670 million). The mall remained fully occupied as at 31 December 2022.
Distribution Distributable income of the Trust dropped 13.6% to HK$1,298 million (2021: HK$1,503 million) and DPU dropped 14.0% to HK$0.1956 (2021: HK$0.2275). Based on the closing unit price of HK$3.08 recorded as at 30 December 2022, the total DPU represented a distribution yield of 6.4%.
Asset Value The appraised value of the Trust’s property portfolio was HK$63.6 billion as at 31 December 2022, declining 2.7% from HK$65.3 billion as at 31 December 2021.
Sustainability While making a stable progress in our 2030 Environmental, Social and Governance (“ESG”) targets, the establishment of the 2045 Net Zero roadmap further reinforces our decarbonisation commitments. Besides the first existing building in Hong Kong to achieve the WELL Building Platinum Standard, our ongoing decarbonisation advancement and green innovation enable Three Garden Road to attain its “Double Platinum” honour along with the Platinum certification of BEAM Plus Existing Building with Hong Kong’s highest score. We also launched a series of activities circled on the “Love . Play . Farm” project to achieve both green and social sustainable impacts.
Outlook The gradual relaxation of COVID-19 measures for residents and visitors in Hong Kong, as well as the border reopening with mainland China should benefit the local economy. Overall, 2023 remains a challenging year for the Trust in view of potential global economy recession despite the fact that mainland China’s reopening is expected to reinvigorate the retail and potentially office markets.
Looking forward, we will continue to take a prudent approach on liability management and treasury management to identify yield enhancing opportunities. For potential acquisitions, we will continue to take an opportunistic and conservative approach. We will continue to monitor the market conditions, and capture business opportunities to enhance the performance of the Trust, and collaborate closely with tenants and stakeholders on our sustainability journey.
About Champion REIT (stock code: 2778) Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade A commercial properties in prime locations. It currently offers investors direct exposure to nearly 3 million sq. ft. of prime office and retail floor area. These include two Hong Kong landmark properties, Three Garden Road and Langham Place, as well as a joint venture stake in 66 Shoe Lane in Central London. Since 2015, the Trust has been included in the Constituent of Hang Seng Corporate Sustainability Benchmark Index of Hang Seng Indexes. Website: www.championreit.com
Champion Real Estate Investment Trust (“Champion REIT” or the “Trust”) (Stock Code: 2778), owner of Three Garden Road and Langham Place, hosted “Love . Play . Farm” Harvest Day on 14 January. Together with The Coffee Academics, the Trust presented the “First-in-Hong Kong” organic Mint Lemonade, putting into practice the “waste to farm to table” concept. Tenants who attended farming workshops earlier and children who participated in mural painting were invited to Langham Place to join the meaningful event. Last year, the Trust invited the young local artist Zue Chan to lead a group of children from disadvantaged families in Tin Shui Wai and children of colleagues in painting an outdoor mural to bring art into Langham Place Mall. The activity also marked the debut of “Love . Play . Farm” activities. Other than being a visual attraction, the mural painting stands for Champion REIT’s efforts to connect different groups in the community and hopes to instill in the children the awareness of green living style.
The Trust has also leveraged Langham Place Mall’s prime location to hold organic urban farming workshops for tenants that they experienced planting seasonal produces like kale, cauliflower and eggplant. Tenants learned organic farming techniques, including sowing seeds, using fertilisers and watering, and enjoyed the fun and happy surprises from farming. On the Harvest Day, tenants had great satisfaction reaping the vegetables they grew, appreciating the fruit of their hard work. The Trust also has a few coffee trees growing in the farm at Langham Place Mall, rather rare in Hong Kong.
Moreover, the Trust has been cooperating with The Coffee Academics to recycle coffee grounds into fertiliser. The two partners have also used the mint leaves harvested from the farm to create the “First-in-Hong Kong”, organic Mint Lemonade drink, a true example of the “waste to farm to table” concept. To encourage living green in the community, the Trust donated 240 cans of Mint Lemonade to St. James’ Settlement and Haven of Hope Christian Service.
Ms Christina Hau, Chief Executive Officer of Champion REIT, said, “The ‘Love . Play . Farm’ Harvest Day could not have been possible without tenants’ strong support and active participation. Looking ahead, on top of focusing on sustainable development, we will keep looking to work with different stakeholders to promote waste and carbon reduction, aiming for synergies so that we may boost the overall well-being of stakeholders.”
About Champion REIT (Stock Code: 2778) Champion Real Estate Investment Trust is a trust formed to own and invest in income producing office and retail properties. The Trust focuses on Grade A commercial properties in prime locations. It currently offers investors direct exposure to nearly 3 million sq. ft. of prime office and retail floor area. These include two Hong Kong landmark properties, Three Garden Road and Langham Place, as well as joint venture stake in 66 Shoe Lane in Central London. Since 2015, the Trust has been included in the Constituent of Hang Seng Corporate Sustainability Benchmark Index of Hang Seng Indexes.
