Link REIT Announces 13% Revenue Rise Despite Retail Downturn

Despite Hong Kong’s biggest retail slump this century, the managers of Link REIT, a real estate investment trust that manages the city’s largest portfolio of shopping space reported a 13.2 percent increase in revenue for the most recent fiscal year, and improvement in a broad range of financial metrics.

In addition to the rise in top line performance, which saw revenues increase to HK$8.7 billion ($1.1 billion), Link Asset Management, which manages Asia’s largest REIT also announced an improvement in net property income of HK$6.5 billion for the fiscal year which ended March 31st 2016, up 14.9 percent from the previous year.

Improving Results Attributed to Better Management

Speaking at an earnings announcement conference this week, Link REIT’s board of directors attributed the improved performance of the retail portfolio to better management of the trust’s more than 11 million square feet of retail assets and 800,000 square feet of office space.

“Following a careful study of our portfolio, we have segmented our Hong Kong portfolio into three groups, namely Destination, Community and Neighbourhood, which facilitates management and marketing to be tailored to different types of tenants and shoppers,” noted Link Asset Management CEO George Hongchoy. “We have also rolled out in April a new Asset Management Model for 20 properties, under which dedicated Asset Managers will oversee their operational and financial planning to enhance asset value.”

The directors also expect the trust’s recent acquisitions, which include the EC Mall in Beijing and phase one of the Corporate Avenue office project in Shanghai, to improve Link REIT’s prospects. “This past year has also seen a dynamic and diversified portfolio taking shape at Link, as we acquired two properties in Mainland China and won the tender for a commercial complex in Mong Kok, a core retail district of Hong Kong,” said Link Asset Management chairman Nicholas Allen.

At the same event the board representatives revealed that Link had approved a final distribution per unit of HK107.19 cents, which, together with the interim distribution per unit of HK98.99 cents, gives a total distribution per unit of HK206.18 cents for the year, an increase of 12.8 percent over the previous year.

Hong Kong’s retail sales slid 7.5 percent in April from the same month in 2015, the 14th straight month of declining performance by shoppers in the city, as a combination of increased friction with its mainland neighbors and a slowing economy have hit the city hard.