Link Reit, Asia’s largest real estate investment trust, set to recover after posting second-lowest annual revenue growth

Link Reit, 100 Market Street, The Cabot, social distancing

Link Reit, Asia’s largest real estate investment trust, reported its second-lowest annual revenue growth ever because of the coronavirus pandemic, but said it was cautiously optimistic about its prospects amid the ongoing economic recovery.

Revenue rose by 0.2 per cent year on year to HK$10.74 billion (US$1.38 billion) for the year ended March 2021, according to a filing to the Hong Kong stock exchange on Thursday.

It was the smallest increase in revenue after the 0.1 per cent rise in 2019, according to data from Refinitiv.

“This financial year was a difficult one in operations and also in growing our portfolio given the travel restrictions,” George Hongchoy Kwok-lung, chief executive at Link, told a briefing on Thursday.

Link Reit, 100 Market Street, The Cabot, social distancing

George Hongchoy, CEO of Link Reit, said its acquisition plans were affected by travel restrictions. Photo: Tory Ho

Despite the challenges, Link Reit has continued to expand its portfolio. Earlier this month, it acquired the Happy Valley Shopping Mall in Guangzhou. In February, it acquired a 50 per cent stake in Shanghai Qibao Vanke Plaza in Shanghai. In the last financial year, Link Reit bought two office buildings – 100 Market Street in Sydney and The Cabot in London.

“The additions to the portfolio accelerate our growth trajectory given they’re immediately income-generating,” said Hongchoy.

Link said that as local consumption was dampened by partial lockdowns and social distancing restrictions, it led to a 9.4 per cent drop in tenant retail gross sales per square foot during the year. It also saw a small number of Chinese restaurant tenants experiencing difficulties and some of them surrendered or restructured their leases.

Link said it has adopted a proactive approach to tackling the challenges brought by the pandemic to ensure communities are served by its neighbourhood shopping centres. Targeted relief measures including rent reduction, grant of rent-free period, service fee waiver and lease restructuring were offered to tenants. Over 400 new leases were introduced to the Hong Kong portfolio during the year.

Link Reit, 100 Market Street, The Cabot, social distancing

Total retail revenue fell 4.5 per cent year on year as a result of property management fee waiver and rental concession. Average monthly unit rent declined 3.4 per cent year on year to HK$62.4 per square foot.

“Although Covid-19 is gradually subsiding in Hong Kong, consumer sentiment is relatively weak,” said Kok-siong Ng, chief financial officer at Link. “We believe tenant performance and leasing will improve slowly this financial year.”

Link’s mainland China portfolio experienced a 6.3 per cent decline in total revenue, mainly due to income loss from asset enhancement of Link CentralWalk in Shenzhen and Covid-19 related rent concessions granted during the year. However, it said that the business quickly recovered and it saw about 200 new leases introduced into the portfolio during the year. 

The company increased its distribution per unit for the year by 1 per cent to 289.99 Hong Kong cents.

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