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Link REIT grows property income by 7 per cent
June 8, 2017
Inside Retail Hong Kong
Net property income for Link REIT grew by 7.4 per cent to HK$6.9 billion (US$897.2 million) for the year to March 31.
Its audited results also show revenue growth of 5.9 per cent to $9.2 billion.
During the year, the valuation of its investment properties portfolio – including property under development and renovation, and properties in Mainland China – rose by 8.3 per cent to $174 billion.
Link says it maintained high occupancy for its more than 150 properties (with more than 11,000 tenancies) in Hong Kong, and three properties in China. “Our tenants’ sales outperformed the overall Hong Kong retail market.”
While the Hong Kong retail market was challenging during the year, occupancy rate stood at 96.1 per cent at March 31. Reversion rate for the year remained strong at 23.8 per cent, while retail rental recorded a 4.2 per cent increase year-on-year.
Strong results continued from Link’s China properties – EC Mall in Beijing and Link Square 1 & 2 in Shanghai (previously known as Corporate Avenue 1 & 2). Link Square 1 & 2 made a full-year contribution for the first time, with revenue of $574 million and net property income of HK$459 million during the year, representing a 36.3 and a 47.6 per cent increase respectively. Being fully occupied, both properties enhanced overall portfolio quality.
The retail reversion rate was 37.1 per cent for EC Mall.
Nine asset enhancement projects were completed during the year, covering Butterfly Plaza, Fu Tung Plaza, Lei Tung Commercial Centre, Sau Mau Ping Shopping Centre, Tai Hing Commercial Centre, Tin Chak Shopping Centre, Tin Yiu Plaza, TKO Gateway (previously Hau Tak Shopping Centre) and Wah Ming Shopping Centre.
Butterfly Plaza in Tuen Mun had a major interior overhaul and the fresh market façade was improved. The revitalised fresh market has since become the new anchor for the shopping centre, driving footfall and car parking revenue.
With a new layout, fresh designs and upgraded retail offerings, Hau Tak Shopping Centre was rebranded as TKO Gateway and has attracted shoppers from catchments beyond the Tseung Kwan O area.
At Tin Yiu Plaza, a traditional market was transformed into an air-conditioned retail space.
Continuing its asset-enhancement strategy, Link has 15 enhancement projects in progress with another six about to start and more than 18 other projects undergoing review. Also, seven of the 33 fresh markets previously run by external companies have been upgraded.
During the year, Link acquired 700 Nathan Road in Mong Kok for $5.9 billion. Renovations are making good progress, with the newly designed podium planned to open near the end of the year.
In April, Link announced the acquisition of Metropolitan Plaza in Guangzhou for RMB4 billion (US$598.2 million).
“We continued to recycle our capital and enhance our portfolio quality through the disposal of non-core assets that lack synergy and have limited growth potential,” says the REIT.
It disposed of nine properties in May last year for a total consideration of $3.6 billion, representing premium of 19 per cent over the aggregate appraised value. Another five properties were sold in February for $3.6 billion, representing a premium of 29 per cent.