Link REIT to Sell Non-Core Assets, Plans Unit Buybacks of Up to HK$2 Billion
Link REIT plans to sell mainland China logistics assets and use proceeds for unit buybacks and Hong Kong property investments. It completed HK$1.5 billion in unit buybacks in the first half and targets another HK$1-2 billion in the second half of the fiscal year.
Link REIT said on 12 November that it will continue selling non-core assets and plans to repurchase HK$1 billion to HK$2 billion in fund units in the second half of the current fiscal year. In the first half, it used proceeds from the sale of Swing By@Thomson Plaza in Singapore to complete about HK$1.5 billion in unit buybacks.
The company has entered into an agreement to sell a portfolio of mainland China logistics properties, including two assets in the Greater Bay Area in which it holds a 75 per cent interest, and three wholly owned assets in the Yangtze River Delta region. The initial consideration is 1.1 billion yuan (about HK$1.18 billion), representing a discount of roughly 3.4 per cent to the end-September property valuation. The sale is expected to be completed in the next quarter.
Link REIT's chief investment officer, Sung Chun-yin, said the company has been reviewing its asset portfolio and believes divesting mainland logistics assets will help reallocate resources to Asian shopping centre projects. He described the valuation discount as reasonable for the sale of non-core assets.
Sung noted that last month the company announced the sale of the “T.O.P.” project in Mong Kok. After several years of significant downward valuation adjustments, the office market has begun to attract buyers as the interest rate environment changes. Link REIT aims to focus on investing in Asian retail assets through the sale of non-core assets.
The proceeds from selling non-core assets will be used for unit buybacks at appropriate times, as well as for investing in Hong Kong property projects. Sung emphasised that Hong Kong remains a very worthwhile place to invest.