Link REIT Sells Two HK Shopping Centres for HK$1.69B

Asia’s biggest real estate investment trust, Link REIT announced today that it had sold two Hong Kong’s shopping centres for a combined HK$1.69 billion ($218 million).

In a statement to the Hong Kong Stock Exchange, the management of the real estate investment trust said that it had sold Wan Tau Tong Shopping Centre in Tai Po for HK$810 million and the Shek Yam Shopping Centre in Kwai Chung for HK$880 million. Both shopping centres are in the New Territories.

While Hong Kong’s retail sector has been affected by a shopping slump recently, the community-centred malls that Link REIT is disposing of, have been less affected than centres catering to travellers and tourists.

Link REIT Disposes of Outlying Centres

The asset sale appears to be a victory for Link REIT as the trust’s managers were able to sell the two properties for a total of more than 27 percent over their appraised value.

“We are pleased with the market’s response,” commented George Hongchoy, Chief Executive Officer of Link Asset Management. Adding that, “Disposal is part of our capital recycling strategy to create value for our unitholders. As a responsible manager, we continue to review the portfolio for opportunities to streamline and improve operating efficiency.”

A company named Yan Yan Motors Limited bought the 75,270 sq ft (6992 square metre) Shek Yam Shopping Centre on Lei Muk Road, Kwai Chung, New Territories for more than HK$160 million over its valuation. The 7-storey property is said to be 92.8 percent occupied as of today.

The 54,464 sq ft (5069 square metre) Wan Tau Tong Shopping Centre at 10 Hiu Wan Road Tai Po, New Territories was purchased by Prosperous Glory Investment (HK) Ltd for HK$810.3 million, more than HK$64 million over the valuation.

According to a statement by Link REIT, the tender for the two properties attracted interest from numerous potential buyers, including property funds and listed companies, with each of the two properties receiving a number of offers. Savills (Hong Kong) Limited and Jones Lang LaSalle Limited were the sole agents for the disposals.

The investment trust said that proceeds of the asset disposal will be used for general working capital purposes including debt repayment and, where appropriate, unit buy-back. Completion of the disposals is scheduled for 31 May 2016.