Citigroup published a research report indicating that the occupancy rate of FORTUNE REIT (00778.HK) has improved, and the decline in renewal rent has narrowed, making the dividend yield of 8.1% attractive. The bank's outlook for FORTUNE for the fiscal year 2025 is relatively less pessimistic than last year, expecting a year-on-year decline of about 4% in the full-year distribution per unit, due to the narrowing decline in renewal rent since the second half of last year, mainly because of slight positive growth in the Dining and service Industry; the drag caused by real estate agencies and kindergartens improving operations and adjusting to market rent levels has decreased; however, the supermarket business still faces pressure.

The report indicated that FORTUNE aims to prioritize improving occupancy rates, with further room for improvement in the fiscal year 2025; adjustments to the tenant mix and promotional activities are driving an increase in foot traffic to relieve the challenges in retail sales. Finally, it is expected that FORTUNE's cost of capital will remain stable at around 4% this year.

The bank stated that despite the retail market still facing resistance, it maintains a 'Buy' rating for FORTUNE, as the dividend yield of 8.1% is attractive, the trend of rent reductions is narrowing, foot traffic remains resilient, there is a stable interest rate outlook, and the REIT is expected to be included in the southbound trading, raising the Target Price from HK$4.50 to HK$4.60.