Fortune REIT's net property income jumped 17.6% to HK$217.9m

Occupancy rate also hit 2-year high.

According to OCBC Investment Research, Fortune REIT (FRT) reported excellent results for 1Q13. Revenue and net property income climbed 16.3% YoY and 17.6% YoY to HK$301.4m and HK$217.9m respectively.

Here's more:

Occupancy rose to 98.6%, the highest level in over two years, with good portfolio-wide operational statistics and a fast recovery after AEI. Average passing rents grew by 10.0% YoY to a new high of HK$32.9 sq ft.

Due to a strong leasing market, rental reversions were at 19.5%, higher than the mid-teen percentages that management had guided. While 2Q/3Q may see anchor tenants renewing leases with lower percentages, we think that revenue and net property income are likely to grow on a QoQ basis.

There was also a full quarter's contribution from Belvedere Square and Provident Square, which were acquired on 17 Feb 2012. DPU of 9.0 HK cents formed 27% of our initial FY13 estimate and 26% of the street’s FY13 consensus estimate.

The HK$100m AEI for Fortune City One (FCO), completed in 4Q12, has repositioned the mall as a one-stop shopping, dining and leisure centre. The HK$15m AEI at Jubilee Square is expected to be completed in 2Q13 with an ROI of over 25%.

Two smaller AEIs at FCO's wet market (HK$18m; starts in 2Q13) and Ma On Shan Plaza (HK$17m; starts in 3Q13) should be completed by end 2013. The next large scale project is Phase 3 AEI for Belvedere Square (HK$80m; 4Q13-end 2014).