Hang Lung profit falls as property losses and weak offices offset record mall rents
Hong Kong developer Hang Lung Properties’ underlying profit fell in the first half as losses from property sales, higher finance costs and a weak mainland China office market offset record rental income from its shopping malls. Underlying net profit declined 10 per cent from a year earlier to HK$1.44 billion (US$184 million) in the six months ended June 30, while revenue rose 23 per cent to…
Hang Lung Properties, a Hong Kong developer, saw a decline in its underlying profit during the first half of the year due to property losses, increased finance costs, and a weak office market in mainland China. Despite record rental income from shopping malls, net profit fell by 17% to HK$758 million. Chairman Adriel Chan credited the previous CEO, Weber Lo, for navigating the company through challenging years, including the coronavirus pandemic and China's prolonged property downturn.
Lo will be succeeded by a CEO-designate on September 7. The development business was the primary factor in the profit decline, with home sales surging but still resulting in an operating loss due to impairment charges on slow-selling mainland residential projects. Rental revenue from Hang Lung's investment properties increased by 5% to HK$4.92 billion, with record earnings from mainland shopping malls.
The company is adjusting its tenant mix to cater to the growing demand for dining, entertainment, and experience-led offerings. Offices were the weakest link in Hang Lung's portfolio, with rental revenue from mainland offices falling by 11% in renminbi terms, and office income at Plaza 66's office tower down by 17%. The company plans to increase its use of lower-cost yuan borrowings and open three hotels in Wuxi, Hangzhou, and Shanghai over the next 18 months.
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