2025-02-21 28Hse Editor
Link Real Estate Investment Trust (0823) announced a 6.4 percent increase in its total distributable amount to HK$6.7 billion for the fiscal year ending in March, fueled by strong performance from its overseas properties, even as the Hong Kong retail sector lagged.
Despite an increase in the number of units, the distribution per unit fell by 4.3 percent to HK$2.63. However, the final distribution was HK$1.33 per unit, marking an 11.59 percent gain from the previous year.
Following the announcement, the unit price climbed 3.74 percent to HK$34.7. Citi has given a buy rating for the stock with a target price of HK$50 per share, noting that the actual distribution per unit surpassed its forecasts.
Revenue and net property income showed significant growth, with increases of 11 percent and 9.5 percent respectively, reaching HK$13.6 billion and HK$10.1 billion. This growth was largely due to contributions from assets in Singapore and new acquisitions in Australia and mainland China.
In Hong Kong, while car park revenues improved, office performance declined, resulting in a modest 2.2 percent increase in revenue and a slight 0.1 percent rise in net property income. Despite these mixed results, retail properties in Hong Kong demonstrated resilience, benefiting from increased cross-border consumption from the mainland. The occupancy rate held steady at 98 percent, although the average reversion rate for the year dipped to 7.9 percent from 8.7 percent in the first half.
Link REIT's CEO, George Hongchoy Kwok-lung, noted particularly strong weekend traffic from Hong Kong consumers at the Link CentralWalk mall in Shenzhen. He expressed confidence in the trust’s focus on retail properties catering to everyday shopping needs in Hong Kong.
On the mainland, Link's portfolio includes six retail properties, one office property, and five logistics assets in tier-one cities and nearby river delta areas, where both revenue and net property income increased by 6.3 percent and 10.6 percent respectively.
The trust's international operations, particularly in Singapore, also saw impressive growth, with revenue and net property income soaring by 1.69 times and 2.05 times to HK$1.7 billion and HK$1.2 billion, respectively.
Addressing the high financing costs, Hongchoy highlighted strategies to mitigate impacts, including increasing the proportion of fixed-rate debts, utilizing funds from rights issues, and selling projects to reduce debt. Consequently, the gearing ratio slightly improved from 24.2 percent to 23.5 percent over the year.
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