Thank you all for coming to Hysan Development's 2021 annual results announcement analyst briefing webcast session. Let me introduce our panel for this afternoon. Our Chairman, Ms. Irene Lee, our Executive Director and Chief Operating Officer, Mr. Ricky Lui, and our Chief Financial Officer and Company Secretary, Mr. Roger Hao. We will start today's session with a presentation from Irene and Ricky and Roger, and we will follow that with time to take questions. I will invite Irene to start. Irene, please.
Thank you, Mark. Hello, everyone. Welcome to the 2021 annual results analyst presentation. 2021 was a milestone year for Hysan. Why is that? If you look at this slide, it clearly explains our business strategy and business mix going forward. There are two key reasons why 2021 was a milestone year for Hysan. Firstly, we continue to expand and consolidate our core portfolio. Secondly, we set out to build growth engines outside our core. We are very happy to report that four new pillars have now been established. This diagram clearly shows our Hysan core is well supported by four strategic pillars. These strategic pillars will be an important part of our medium to longer term diversification and growth strategies, while also ensuring our core remains strong and relevant. Let's take a closer look. We are very familiar with this area map.
We successfully acquired Caroline Hill last year, adding an important piece of the puzzle to the Lee Gardens precinct. This site will add another 30% to our area GFA, which will allow us to create new opportunities for our tenant mix, expanding our content footprint and adding significant lifestyle facilities to the community. Together with the connectivity plans and the ongoing rejuvenation and upgrade of our portfolio, sitting amongst a curated and unique community, we are very well-placed to ensure Lee Gardens remains our strong core and center of excellence. Most of you would be familiar with these pictures as well, perhaps with one new one. Let me explain the four pillars. We identified growth engines, which in the medium to longer term, will provide geographic and business diversification that complement our portfolio, while also provide opportunities for efficient use of capital.
Let me just say a few words on each of our four pillars, starting from the top left. IWG. We partnered with the established, successful, and global flex operator, IWG, to roll out flex operations throughout the Greater Bay Area. Many of you would have heard me talk about the development of the, in the old days, it used to be called co-work, but we prefer to call it flex. It is actually flex business. Increasingly, with the pandemic, with people's interest in containing costs, this is here to stay. In fact, this is big business, and this supplies a good hedge to our office portfolio. To its right, Lee Gardens Shanghai. We finalized the purchase of the Grade A commercial building in the Jing'an area, and we intend to launch our Lee Gardens brand in Shanghai. Again, you will get a little bit more detail from Ricky.
This, with the very interesting traditional Shanghai low rise and the grade A facilities, will be very complementary to what we have. In fact, it is quite similar to what we have in Hong Kong. We feel very prepared and able to really develop this concept in Shanghai. To Kwa Wan to the bottom left. With our beautiful type of residential project nearly completed, with the sales process starting in April, we are now ready to start our journey on a second project. This important urban renewal project in To Kwa Wan is our next residential project in the pipeline. You can see it is a very large, impressive footprint, the T-shape shaped in the red line. This will provide and maintain our momentum on the develop and sell project area. To the bottom right is New Frontier. Health and wellness is an important part of life.
As we face an aging population, medical and biotechnology will be a sector of our focus. These four pillars are now established and will provide balance and diversification, while also help protect and complement our core business. Very briefly on results. 2021 was a satisfactory year against the backdrop of the pandemic, macro and geopolitical issues. I will call out three areas that we focused on. One is our proactive management of leases. Secondly, we have a very dedicated, capable, and caring property management team providing top-of-class service. We also continue to practice inclusive community curation. Last year was another year of the virus, of COVID. Our top priority was to help the community during the pandemic and to help defeat the virus and support our tenants, as well as our stakeholders. Amongst the many things that we did, I would like to just call out a few.
We practice dynamic and multifaceted solutions in support of our tenants. We provided, for free, 1,000+ medical grade air purifiers to our F&B and our service tenants. This is what I am very proud of as well. 99% of our staff at Hysan received two vaccination doses, and we are talking about last year. We were a good role model for the community. We partnered with Adventist Hospital to host Hong Kong's first mall-based vaccination promotion center. We also donated health check packages through the Adventist and Po Leung Kuk to underprivileged and frontline workers in preparation for their vaccination. The fifth wave. We are right in the middle of it and it is very serious. What we have done is we have stepped up our involvement by setting up Hong Kong's first satellite community vaccination center.
This is really a good example of public-private, the government and private sector in cooperation, at our Leighton Centre, level 7. We actually completed this entire project within one month, so that is a very good demonstration of how the public and private can collaborate. This center provides 1,300 doses for the public every day. We are now in discussion with the government to expand vaccination facilities at Lee Gardens. We are also preparing for further community support. For instance, care packages for the elderly and equipment for community organizations. Our own families, Lee Hysan Foundation, which is our private foundation, continues to also contribute to the community during these difficult times. With that, I will hand over to Ricky to review the business and operations.
Thank you, Chairman. Good afternoon. I would like to give some colors of our business and operation for 2021. 2021 is a year with COVID. We live with them the whole year. Of course, it gives some pressure to the business. With the team effort, we still achieved, I would say, very decent result. For the revenue, we achieved HKD 3,608 million, with current underlying profit is HKD 2,330 million. Dividend per share, HKD 1.44. The office sector contribute 48% of the income and 45% from retail and 7% from residential. Occupancy, we still keep a very good occupancy for office and retail, which is 94% and 99% respectively. Residential, we still maintain the 71%. Talk about office.
During such a difficult time, the office has dropped only 1% in occupancy, despite the combined trend of office downsizing and hybrid work mode. Management have put in a lot of effort in two areas to achieve such a result. Firstly, for asset management of leases, as Chairman has mentioned. For example, for the 2022 expiry area, 35% has already committed today for renewal. The second area we have been putting effort in is to continue to curate our unique smart community business model and tech readiness, which is appealing to new economy tenants. Today, Lee Gardens is the preferred location for the festival workspace operators. Just to 2021, 50,000 sq ft has been added to our portfolio. Also, we are ideal venues for service sectors. Wealth management, education, medical and health has seen significant growth, as you can see on the pie chart on the right-hand side.
Retail, the 99% occupancy is very respectful. Hong Kong retail sales general improve a bit minimal tourist spending, and Hysan has outperformed the Hong Kong retail's performance, as you can see from the table on the right-hand side. Hysan's strong and growing local customer base, and the popular loyalty program provides resilience to our portfolio. Throughout the year, as shown on the pie chart, or by the bar chart on the right-hand side, we experienced a steady growth of the sales through the year before the fifth wave. Also, when we come to the marketing, we have been putting effort into the O2O strategies. We have a lot of strategic marketing campaign, both digital and physical. Basically, an online-offline combination, has brought impressive traffic to Lee Gardens and drove strong sales.
We also broadened our base of VIP members through prominent brand events and collaboration, not only from high brands, but also to NFT art gallery, with very encouraging results. We also tried our digital marketing campaign, system embedded a 7/24 shopping experience. The Dine Safe, as well as the Power Up campaign, has achieved very good result, which also tested our online e-commerce capability. Recently, we have launched our one-stop digital engagement platform of Hysan, called Hy! Platform. This is a comprehensive platform that serves both engagement to improve the stickiness with our customers, as well as creating a very strong e-commerce platform. Residential. Bamboo Grove leasings remain under pressure due to the lack of professional expatriates arriving in Hong Kong. The above is all about our core operations. Now we come to our new investment and initiatives. Let's start from our core reinforcement.
Caroline Hill site project, which is a very important milestone for Hysan and also a strategic expansion. It will bring 1.1 million sq ft new commercial area, 60,000 sq ft of green, 600+ car park. We expect to complete the project by end 2026 or beginning of 2027. This massive site also creates a need and opportunity to address the connectivity and walkability of the whole Lee Gardens. We are going to build five new bridges, plus one covered walkway to connect all the Lee Gardens buildings. In future, by 2026, which is the scheduled completion date for those walkability system, connectivity system, you will have a very pleasant and weatherproof journey all the way from Hysan Place to our new Caroline Hill building. Talk about the building, the pillars. The first one we talk about is the Lee Gardens Shanghai. For properties, we always talk about location.
This is really at a strategic location in the heart of Jing'an. It is just three minutes walk from the Shanghai Natural History Museum station. Also one station away from Nanjing East Road and also the Dazhongli. The Grade A commercial area position has already been established by the already completed One Museum Place by Hines, which already command a very high occupancy, as well as one of the highest rental in Shanghai. The project itself is about 540,000 sq ft office, plus about 200,000 sq ft of retail, 24 storey high with two level of basement for retail and another 324 car park. The whole area, under the government planning, is to convert it into a 6 million sq ft commercial precinct connected to the Nanjing East Road. This is the organic mix of the high-rise and terraced building settings.
It is really similar to the Lee Garden, Hong Kong, and that also give us extra confidence that we can contribute to this area transformation and secure our position as a Lee Gardens Shanghai. For the Tai Po project, it is almost completed, and we expect the OP to be issued within this first quarter or second quarter. This is a very prestigious resident with a lot of spirit of Hysan. We boldly put our quality and experience in building best quality commercial properties into this residential properties. I would say everyone will love it, and not only about the extraordinary natural scenery from mountain to the Tolo Harbour. You will also see all the details and the commitment of Hysan in the building quality and design. You must come and visit it when it is ready. Total, there were 262 houses and flats, and there were 350 car parks.
Hong Kong One is a kind of natural fit to Hysan. It is a favorite project for the very community-based company of Hysan, which has spent 100 years to curate our Lee Gardens. We will take 25% stake of this in a joint venture with Henderson and Empire Group Holdings, both are very profitable partners. The total GFA will be 600,000 sq ft of residential, + 120,000 sq ft of retail. We will also be the one who oversee the design and operation of the retail portion of the process in order to curate the area with its own unique characters and attractions. About IWG joint ventures. First, as Chairman said, IWG is, I would say, is the best and largest flexible workspace operators. They have more than 30 years of experience all over the world.
The GBA area is an area that we are very interested to invest in, not to say all the economic potential and also the PRC government policy support to that area. From the demand side, the modern share economy, hybrid on-demand work mode is a trend, and we don't see it will go back. This is a kind of, we believe, flex will be the future of work, and it will be a very complementary one to work together with traditional office leasing. We think this will form a very interesting ecosystem, which we already experienced it at Lee Gardens. About investment in New Frontier Group. New Frontier Group is a leading private healthcare service provider based in China.
I think one of their brands or one of their core business, you may know, is called United Family Healthcare, which has been serving expat and a high-end market for more than 20 years in China. There are other services, including comprehensive service, ranging from private hospital and clinic, post-acute facility-based care to home-based care service. This investment provides strategic exposure for Hysan in the fast-growing healthcare sector in mainland China. At the same time, we believe medical and health have become such an important element for both retail and office properties. That means this can also be a very good anchor and content for our own portfolio. When we talk about asset-light investment strategy, the pillar investment, there's a principle for our investments. First, we partner with the leaders. Secondly, complementary with our property portfolio. Thirdly, enriching our smart community business model.
We believe when we invest, at least it will take one or two or even three of those principles. Sustainability, a very hot topic now. As a corporate, Hysan has a tradition of very careful in doing all the sustainability. We do care the community, and we want to be a very sustainable company. We are also a good citizen company. From the rating we get from FTSE , Hang Seng Corporate Sustainability Index, FTSE4Good , Sustainalytics, MSCI ESG Ratings, we all got very good praise there. This year, we also get a lot of recognition from different professional bodies. Something that we cannot miss is about Hysan has just done the largest green loan in Hong Kong of amounts of HKD 12.9 billion. Up to now, other than loan, we also have green bond, sustainability-linked loan, sustainability-linked hedge, sustainable bonds.
All come together, HKD 16.8 billion, which account to 40% or more than 40% of our total debt and facilities. Thank you very much. This is the highlight for our operations.
Okay.
Roger.
Thanks, Ricky and Irene. Next, I am going to just present very briefly our financial management. First and foremost, Hysan continues to be in a very stable and strong financial position, as you can see from this page. Shareholder fund, around HKD 74 billion. NAV per share, HKD 71, both are slightly increased from that of last year. Our full year dividend per share, as you can see from today's announcement, is HKD 1.44. On the dividend, our next page, you see that this is actually a history of the last 10 plus current 2021 years. It demonstrates our drive to maintain a stable and progressive dividend per share. Even during difficult times, like starting from 2019, where we had social events and as well as COVID, we maintained our dividend at HKD 1.44.
Finally, the last page, just a quick recap of the key financial metrics. Net gearing at a level of around 12%, effective interest rate 2.9%, fixed rate debt ratio about three quarters of our debt are fixed rate, and the average debt maturity is six years. Just for contingency, we had undrawn committed facilities of about HKD 5.6 billion. Last but not the least, our credit ratings maintained at the high investment grade, that is Moody's A3 and Fitch A-minus. That concludes our presentations. Thank you very much.
Thank you, everyone. Now time for questions, and we will start with a few questions, in fact, from Citi's Ken Yeung. How is the latest tenant sales performance in January and February of this year when Omicron impact kicks in? Will you consider a fresh Hold on one sec. Will you consider a fresh round of rental reliefs for tenants? How sales and reversion outlook of your retail for the year 2022?
Maybe let me take a step on the numbers first, and then Irene and Ricky can talk about the strategy and commercial aspect. We are still in February. The number has not come in yet. For January, actually, the momentum of the sales are pretty much there, I would say, especially from a year-on-year basis. That is consistent with what we see in the second half of the year. Mind you, that is before the fifth wave of COVID. In terms of reversions, as we last discussed at the interim, for our office, we start to see we are entering into the negative territory, and we believe that we will still be in that negative territory this year.
Whereas for retail, after two consecutive years of very challenging operating environment with negative reversions, we think that from an occupancy cost ratio, a lot of our tenants has been improved to a much sustainable level. It is still a bit early to project the whole year, obviously, especially with the uncertainty in Hong Kong as well as the macro environment. From a business point of view, Ricky, would you like to share something with the team?
Yeah. I think for the negative reversion of rental, actually it is more related to the base, when your space compare with three years ago when the market is still good. But if you look at the rental year-on-year comparisons itself for similar spaces, we can see basically it is stable and slowly pick up, which reflect about the kind of rent the sales gradually pick up during 2021. Of course, when you talk about the fifth wave, unluckily, everyone becomes experienced to this kind of this is the fifth wave. So I think we stay calm to look at the development of the situation. Of course, this time we also have the central government and the government either support or their way to handle the fifth wave. We hope this is short-term.
If this is short-term, then we will do as we always do, is to work our solution proactively together with our tenant to support them to keep afloat during the difficult time.
Mm-hmm. Now, this next one is about office. Ken and quite a few others are asking about this as well. What will be the reversion outlook for your office portfolio this year?
Well, again, coming back to the projection for the whole year, I guess there are a few data points that might be relevant, Ken Yeung and the others. First of all, the expiring rent, that is the rent for leases that is coming to expiry this year, is actually slightly below that of last year, which mathematically is advantage for us. Obviously, the key thing will be the rental trend and the movement. We believe that we will still be in the negative territories, but the actual scale of that will really depend on the spot rent movement.
Okay. This third question is about the DPS. Thanks for keeping the DPS flat for the financial year 2021. If Omicron situations continues to last for a while in 2022, will that hurt your steady DPS commitment?
Well, maybe let me take this. Overall, as we communicate in prior years, each year when we, with the final result and present to the board our recommendation for the dividend, I think we take into consider three matters or three area. One is the operating results. The second is the near term cash requirement, and thirdly is the economic outlook. I guess it will not be very different from the previous years. Obviously, we work very hard to, as in my presentation, that we try to maintain a stable and progressive dividend path. I believe that maybe, when we meet again in the interim results, we have a better idea of how the whole year will look like. Obviously, one of the key thing, really it depends on the development of the fifth wave of the COVID.
Mm-hmm. Right. A couple questions from UBS's Mark Leung. Should we expect more development business in Hong Kong?
I think for this question, it's interesting, because the company direction is to have different income parts to support so that we have a more balanced and resilient revenue streams. We will keep looking at the right opportunities in development properties. Again, our core business is still the commercial properties of the Lee Gardens area. Even when we try to keep the vintage of the one properties, we still will keep our rhythm and find the right projects.
Right. The next two questions are more Mainland related. When will Shanghai Lee Gardens start to contribute the rental? The other one is, what is the synergy of investing into New Frontier Group?
Okay. Maybe I take the first one first. About the Lee Gardens Shanghai, actually, the office already had the occupation permit. We can lease it out now. At the same time, we take the chance to enhance the quality a little further. We expect in the second half, we want to have the first tenant office to move in. We are now already start our marketing. For the retail part, we are doing some finishings for the public area and some reconfigurations. We expect it will take about 18 months. So after 18 months, we expect the retail will also kick in for the contributions. The second question is about the New Frontier. Okay. I think New Frontier, as I said, is one of our grow. It will cover the office sector.
We also talk about, for example, Lee Gardens area is a preferred location for the service industry. One of the major service industry are the medical and health. Even for the Lee Garden Eight or the Caroline Hill site, we already have medical and health operator really want to lease the space, tenanted space for them to put in a very high-end and large-scale medical center there. So it works similarly, even in China, in other projects. Having a very strategic and powerful comprehensive investment on this kind of service provider, actually it will provide a lot of synergy when we come to a suitable project that we need such an element, and we will see in long term, this is a big benefit. Right now, as the New Frontier itself, it perform very well, and we see very good EBITDA growth over the years.
Maybe I want to add a little bit of supplement there. New Frontier, we started talking to them right at the beginning. It is a group of people we know well, and the area of investment is, number one, extremely relevant to today's aging population. Health and wellness is front of mind for everybody. In China, it is a government-supported area. It is a very, very critical area that policy is behind, and that is very important for us. Fourthly, for our portfolio, as Ricky said, it is very complementary to what we have. It really adds not just content, but it also helps us partner with not just them, but with other people who we can then do due diligence on, and we actually feel a lot more capable of recruiting fairly important and big tenants into our area.
I think with the Caroline Hill site, which has brand new space, this is something that we are going to focus on. This is a tenant group which will be very important to us. It is very complementary. It helps our portfolio, it complements what we do, but at the same time, it is a standalone excellent investment, which is always our starting point. Each investment has to be good on a standalone basis, and if it also produces great synergy, that is important too. But that is not going to drive the investment in the first place.
Okay. This next one is from Bank of America's Saurabh. Back to retail mainly. Turnover rent reached a record high in the year 2021. Now, given the latest round of Omicron outbreak, do you see the further need of changing the lease structure to rely more on turnover rent when Hysan renews leases in 2022? Or do you think providing cash rental support is sufficient?
Okay. I think this question is very interesting. When you look at the turnover rent structure that we put in our leases, it works well. When we come to this kind of support for the tenants, this restructure could be one of the options, which of course, including one of the options about the kind of turnover rent versus basic rent kind of combinations. We rarely have any kind of pure turnover rent basis leases. Second is about when we talk about support or rental concession, these are all very short-term fixes. From our experience, we put a lot of effort to help our tenants on their business rather than just giving the rental concession support. We mentioned about part of our online platform, e-commerce platform campaign.
For last year, even for this COVID time, we have held six or seven strict event, large scale, to stimulate the sales. We do see, first it draw people here. At the same time, it also bring business to our tenants. If you talk about this kind of arrangement, we like our tenant to have good turnover, whether this is turnover-based rent or not. More important is that we stimulate their sales.
Okay. Seeing that we seem to have covered most topics and we are running a bit out of time, let me take this last one from Goldman Sachs' Simon Cheung. How are you thinking about capital allocation or new opportunities given the sizable investment in Caroline Hill? Any threshold gearing ratio, including or excluding the perpetual securities?
Right. Maybe let me take that. Thanks for the questions. Again, like we explained before, when we look at the capital allocation, obviously we have a whole set of tools available. The toolbox, dividend is one of that, share repurchase is another. In terms of the gearing level, I think we are committed to maintain a respectable high investment-grade credit rating. As you can see there, from a net gearing point of view, we still have a very healthy level, I would say, compared with the industry average. We will continue to monitor our positions and ensure that we have a very good balance sheet.
Great. Thank you, Roger. Thank you, Irene and Ricky. We are out of time, and many thanks to everyone for participating. Again, we hope to see you in person, whenever that may be. Hopefully, that will be our next results announcement session in the middle of the year. See you then.
Thank you.
Thank you.
See you.
Bye-bye.
Bye-bye.