Review of Operations – Business in Hong Kong Property Investment 2011 Highlights • Including attributable contributions from associates and jointly controlled entities, the Group’s gross rental income increased by 11% year-on-year to HK$4,889 million, setting a new record • 9.2 million square feet in attributable gross floor area of completed investment properties • Quality portfolio with core properties attaining 97% occupancy at 31 December 2011 Property Investment Leasing performance was impressive innovative marketing activities, including during the year with gross rental income organizing shopping tours for mainlanders setting a new record. The Group’s and an increased adoption of multi-media At 31 December 2011, the Group held attributable gross rental incomeNote in Hong promotional channels, to draw more a total attributable gross floor area of Kong for the year ended 31 December shoppers to its shopping malls and boost approximately 9.2 million square feet in 2011 increased by 11% to HK$4,889 tenants’ business. These marketing efforts completed investment properties in Hong million, whilst pre-tax net rental incomeNote coupled with the advantageous locations Kong, comprising 4.5 million square feet was HK$3,585 million, representing a near MTR stations make these shopping of commercial or retail space, 3.4 million growth of 15% over the previous year. At malls the preferred choice for many square feet of office space, 0.9 million 31 December 2011, the leasing rate for the discerning retailers. For instance, Inditex, square feet of industrial/office space and Group’s core rental properties rose to 97%. a global fashion group, has committed to a 0.4 million square feet of residential and (Note: this figure includes that derived from the total gross floor area of 62,000 square feet at apartment space. This leasing portfolio investment properties owned by the Group’s Metro City Phase II in Tseung Kwan O for is geographically diverse, with 25% in subsidiaries (after deducting non-controlling its three well-known international brands, Hong Kong Island, 34% in Kowloon interests), associates and jointly controlled namely Zara which has opened already, and the remaining 41% in the new towns entities) Bershka and Pull & Bear, which are due to (with most of the latter being large-scale open consecutively in 2012, whilst H & M shopping malls). Given continued growth in local Hennes & Mauritz Limited, another global consumption, as well as the ever- fashion group, has also committed to a total The composition of the Group’s increasing number of mainland tourists gross floor area of over 53,000 square feet diverse property investment portfolio purchasing international brands, Hong at this mall for its well-known international at 31 December 2011 is shown in the Kong’s retail sales grew briskly in 2011. brand, H & M which is due to open in mid accompanying chart. In response to market changes and to 2012. The whole Skyline Plaza, a 4-level tap new opportunities, the Group staged shopping mall in Tsuen Wan with a total Investment Properties gross floor area of over 150,000 square (gross floor area in million square feet) feet, was leased to a famous department 6 - store, which will open for business and provide one-stop shopping convenience in 0.92 5 - Residential / Hotel serviced suites 2012. Consequently, most of the Group’s 0.95 4 - shopping malls, ranging from ifc mall in 0.01 Office Central to regional shopping centres in new 3 - 3.51 Shopping malls towns, recorded nearly full occupancy by 2 - 3.20 Industrial / Office & Industrial the end of the financial year. 1 - 0.19 0.37 On the back of persistent demand growth, 0 - 0.08 Hong Kong Island New Territories driven by business expansion and new & Kowloon corporate set-ups particularly in the first Henderson Land Development Company Limited 52 Annual Report 2011 Review of Operations – Business in Hong Kong • Property Investment Metro City Phase II, Tseung Kwan O, Hong Kong half of the year, coupled with limited new February 2011, was 98% let by the end of undergoing a revamp and the first phase office supply, the Group’s premier office the financial year. of renovation works will be completed in developments in the core areas, such as the the first quarter of 2012. The second phase ifc in Central, AIA Tower in North Point The Group’s deluxe serviced suite hotel at of renovation commenced in December as well as ING Tower and Golden Centre Four Seasons Place continued to achieve 2011 and will be completed by the end of in Sheung Wan, have all performed well high occupancy and increased rents, whilst 2014. For the Trend Plaza in Tuen Mun, with increased rents for both renewals luxury residences such as Eva Court and 39 renovation to the external wall of its North and new lettings. In the up-and-coming Conduit Road at Mid-Levels also recorded Wing will also be completed in mid-2012 commercial hub of Kowloon East, the satisfactory leasing performance. following the recent completion of a Group’s approximately 2,000,000-square- facelift at its South Wing. The first phase foot portfolio of premium office and The Group continuously improves of refurbishment at Sunshine City Plaza industrial premises benefitted from the accessibility and facilities at its investment in Ma On Shan is progressing well, whilst trend of office decentralization with the properties so as to better serve the the planning of renovation works for City overall leasing rate surging from 87% at community and enhance their rental values. Landmark I in Tsuen Wan and AIA Tower 31 December 2010 to 98% at 31 December Metro City Phase II in Tseung Kwan in North Point is currently in the pipeline. 2011. Manulife Financial Centre in Kwun O, which was ranked First by the Hong For AIA Tower in North Point, acquisition Tong, which set a new benchmark for green Kong Federation of the Blind, Centre for of its remaining 5.44% interest was office buildings in decentralized areas Social Policy Studies of The Hong Kong completed in September 2011, allowing by achieving the top “platinum” rating in Polytechnic University and few other the Group to benefit in full from its future the Hong Kong Building Environmental charitable organizations for the disabled major revamp. Assessment Method (HK-BEAM) in in Barrier-Free Assessment Visit 2011, is Henderson Land Development Company Limited Annual Report 2011 53 Review of Operations – Business in Hong Kong • Property Investment Major Completed Investment Properties Attributable gross floor area (square feet) Residential/ Group’s Hotel Attributable Lease interest Serviced Industrial/ no. of Name Location expiry (%) Suite Commercial Office Office Total carpark Hong Kong Island Eva Court 36 MacDonnell Road, Mid-Levels 2895 100.00 108,214 - - - 108,214 49 Golden Centre 170-188 Des Voeux Road, Central 2050 100.00 - 21,842 134,450 - 156,292 - ING Tower 308-320 Des Voeux Road Central / 2865 100.00 - 31,987 182,373 - 214,360 - 98-116 Wing Lok Street AIA Tower 183 Electric Road, North Point 2047 100.00 - 22,338 490,072 - 512,410 207 One International Finance Centre 1 Harbour View Street, Central 2047 40.51 - 53,124 317,793 - 370,917 71 Two International Finance Centre 8 Finance Street, Central 2047 40.51 - 206,151 448,975 - 655,126 189 (excluding levels of 33 to 52, 55, 56 and 77 to 88) Four Seasons Place 8 Finance Street, Central 2047 40.51 214,724 - - - 214,724 7 CentreStage 108 Hollywood Road 2072 100.00 - 16,084 - - 16,084 64 39 Conduit Road 39 Conduit Road, Mid-Levels 2061 60.00 37,516 - - - 37,516 65 Kowloon Hollywood Plaza 610 Nathan Road, Mong Kok 2047 33.33 - 33,511 64,422 - 97,933 - Kowloon Building 555 Nathan Road, Mong Kok 2060 100.00 - 28,656 84,626 - 113,282 - Winning Centre 29 Tai Yau Street, San Po Kong 2047 100.00 - - - 150,212 150,212 - Well Tech Centre 9 Pat Tat Street, San Po Kong 2047 100.00 - - - 171,805 171,805 40 Big Star Centre 8 Wang Kwong Road, 2047 100.00 - - - 175,447 175,447 20 Kowloon Bay 579 Nathan Road 579 Nathan Road, Mong Kok 2037 100.00 - 7,805 18,810 - 26,615 - Paradise Square 3 Kwong Wa Street, Mong Kok 2054 100.00 - 8,244 - - 8,244 72 Dragon Centre 79 Wing Hong Street, 2023 100.00 - - - 172,117 172,117 76 Cheung Sha Wan Manulife Financial Centre 223-231 Wai Yip Street, 2050 88.50 - 47,860 919,004 - 966,864 394 Kwun Tong 78 Hung To Road 78 Hung To Road, Kwun Tong 2047 100.00 - - - 119,995 119,995 16 Bamboos Centre 52 Hung To Road, Kwun Tong 2047 100.00 - - - 125,114 125,114 - AIA Financial Centre 712 Prince Edward Road East, 2047 100.00 - - 216,593 - 216,593 70 San Po Kong Cité 33 33 Lai Chi Kok Road, Mong Kok 2026 100.00 - 13,620 - - 13,620 - The Sparkle 500 Tung Chau Street, 2055 100.00 - 53,443 - - 53,443 - Cheung Sha Wan Henderson Land Development Company Limited 54 Annual Report 2011 Review of Operations – Business in Hong Kong • Property Investment Attributable gross floor area (square feet) Residential/ Group’s Hotel Attributable Lease interest Serviced Industrial/ no. of Name Location expiry (%) Suite Commercial Office Office Total carpark New Territories Fanling Centre 33 San Wan Road, Fanling 2047 100.00 - 151,513 - - 151,513 302 Flora Plaza 88 Pak Wo Road, Fanling 2047 60.00 - 94,657 - - 94,657 130 The Trend Plaza Tuen Mun Heung Sze Wui Road, 2047 100.00 - 195,280 - - 195,280 78 Tuen Mun Marina Cove Lot No.