Hong Kong’s Link REIT posted revenue growth of 5.4 percent to HK$12.2 billion ($1.6 billion) for the 12 months ended in March, as the total distributable amount for Asia’s largest listed trust edged up 0.6 percent to HK$6.3 billion despite a sharp rise in market interest rates.
Full-year distribution per unit stood at 274.31 Hong Kong cents, down 10.3 percent from a year earlier, reflecting a 20 percent increase in issued units after Link raised HK$18.8 billion from a one-for-five rights issue towards the end of its financial year. The DPU resulted in a dividend yield of 5.8 percent based on Link’s closing price of HK$47.30 on 30 May 2023.
Net property income grew 4.8 percent to HK$9.2 billion as valuation of the investment property portfolio rose 11.6 percent to HK$237.5 billion, boosted by Link’s acquisition of two retail assets in Singapore from Mercatus Co-operative.
“Despite a challenging start to the financial year, our active and effective portfolio management strategy empowered us to remain productive and resilient against market cycles,” Link CEO George Hongchoy said Wednesday in a release. “We are delighted to report an increase in our net property income, while our valuations and earnings remained stable.”
Foreign Exchange Loss
Link recorded a profit before transactions with unitholders of HK$15.3 billion, up 121 percent year-on-year. But the trust’s full-year profit of HK$2.1 billion after distributions was whittled to a comprehensive loss of HK$182 million when accounting for foreign currency depreciation.
Occupancy was at 95 percent or above throughout the retail and logistics segments of Link’s portfolio across Hong Kong, mainland China and overseas, while the occupancy rate of The Quayside office building in Kowloon East stood at 98.2 percent despite weak office demand, according to the trust’s manager.
The mainland China portfolio saw revenue decline 5.9 percent year-on-year as net property income fell 9.8 percent, mainly due to the deteriorating pandemic situation throughout most of 2022. The drop was partly offset by new contributions from logistics assets, including three warehouses in the Yangtze River Delta acquired for RMB 947 million ($139.3 million) in May of last year.
The international segment generated a total of HK$648 million in revenue and HK$390 million in net property income, up 34.4 and 15 percent respectively, led by three retail assets in Sydney that began contributing income streams last July.
Ready to Invest Further
After completing its maiden one-for-five rights issue in March at a subscription price of HK$44.20 — with a total subscription rate of over 240 percent — Link hailed its strengthened capital base from which to capture accretive investment opportunities.
“With unitholders’ overwhelming support to our HK$18.8 billion rights issue, we are now in an even stronger position to pursue investment opportunities that will deliver long-term value to our unitholders,” Hongchoy said.
Link REIT’s Hong Kong-traded units closed Wednesday at HK$45.50, down 3.8 percent on the session.