Annual Report 2020

Property Rental Business Hong Kong’s retail industry has suffered successive shocks by the epidemic, and the rents of shops and commercial buildings in core shopping districts have continued to drop with ascending vacancy rate, further to the exits of international brands in Hong Kong, the reduction of business scale and branches by local chain retailers, and the closure of small and medium enterprises. Overall leasing activities have slowed down as a result. Relief measures including lease restructuring and rent concessions were offered to individual tenants to withstand the vicissitude. The revenue of our property rental business thus contracted slightly to HK$819 million with EBITDA at HK$713 million, which were down 10.3% and 10.7% respectively compared with last year. The Group proactively launched various marketing activities and promotions to drive footfall to the mall and boost tenants’ sales revenue, such as coupon rebates campaign “DINE & EARN — Reward Your Way!” and “MIRA Grab & Go” takeaway offers. Besides, the Group has continued to instill dynamism and a sense of freshness into the mall through optimizing tenant mix and introducing new brands including Gyu-Kaku Buffet, Donguri Republic, etc. We also made an all-out effort to improve various facilities including the repartitioning of retail space, refinement of arcade layout, and upgrade of facilities including lavatories and concierge, which were completed in the third quarter. This served to release and maximize the mall’s potential, and further enhances traffic flow, property asset quality and service level. Change in Fair Value of Investment Properties The Group’s investment properties (mainly Mira Place) are stated at fair value, being reassessed semi-annually. The fair value of investment properties was determined on the basis of opinions provided by an independent firmof professional surveyors (Cushman & Wakefield Limited). The enduring COVID-19, depressed consumer sentiments and the overall lackluster economic performance all converged to weigh upon the rental levels of both retail shops and office premises in Hong Kong. The fair value of the Group’s portfolio of investment properties has thus decreased by HK$152 million during the year (2019: an increase of HK$504 million) with book value at HK$15.3 billion as at 31 December 2020. The investment properties of the Group are held for long-term to earn recurring income. The revaluation loss is non-cash in nature and has no substantive impact on the cash flow of the Group. 016 Annual Report 2020 Miramar Hotel and Investment Company, Limited Management Discussion and Analysis