Hysan Development Co (0014) is redeveloping commercial block Sunning Plaza and residential project Sunning Court, in Causeway Bay, into a single mixed-use office and retail complex.
This is the first project for the firm after the opening in August of Hysan Place, whose rental earnings so far total HK$431 million.
The redevelopment, which has already started, will boost the current total gross floor area of the two buildings by 25 percent - or 90,000 to 100,000 square feet - upon completion in 2018, deputy chairman and chief executive Lau Siu-chuen said.
Sunning Plaza currently has a gfa of 277,000 sq ft, while Sunning Court has 98,000 sq ft.
The company received government approval for the enlarged floor plan in April 2009.
"Occupancy rate of the office area within Hysan Place has risen to 56 percent, from 53 percent as at end-2012," Lau said, adding rent for all retail spaces is set to rise. About 70 percent of customers at Hysan's retail complexes are locals, Lau noted, adding such businesses are therefore unlikely to feel a significant impact if visa rules for mainland visitors are tightened.
The firm's properties include the flagship Lee Gardens, as well as Lee Theatre Plaza, Lee Gardens Two and Leighton Centre - all in Causeway Bay.
Annual underlying profit rose 23.8 percent to HK$1.62 billion last year, beating Bloomberg's estimate of HK$1.53 billion, thanks to higher-than-expected rental contribution from Hysan Place.
Earnings per share based on the underlying profit hit 152.83 HK cents.
The full-year dividend reached 95 HK cents, versus 79 HK cents in 2011.
Net asset value per share jumped 18.9 percent from a year before to HK$54.68.
Revenue rose 29.3 percent on year to HK$2.49 billion, but excluding the contribution of Hysan Place, revenue gained 6.9 percent to HK$2.06 billion.
Lau said up to HK$1 billion has been set aside for capital expenditure, excluding the budget for the two Sunning redevelopments.
Shares fell 1.6 percent to HK$39.55 even though earnings surpassed forecasts.