Hong Kong real-estate investment trust Link Reit has sold a portfolio of properties including 17 shopping centres for HK$23 billion (US$2.94 billion), said to be the biggest sale of its kind in the city.
Link Reit says the sale, involving 2.2 million sqft, is to a consortium led by Hong Kong-based private-equity fund Gaw Capital Partners and including US investment bank Goldman Sachs.
The shopping centres are in Kowloon and the New Territories, near to subway stations and including more than 8000 parking spaces. They include Cheung Hang in Lions Rise, Kai Yip in Kwai Shing East, Kam Tai in Lai Kok and Lei Chen Uk in Lee On.
“The competitive bids and final sale price signify a vote of confidence in Hong Kong’s economy and retail sector,” says CEO George Hongchoy of Link Asset Management, the manager of Link Reit.
However, activist groups says the deal, the trust’s biggest in its 13 years, will lead to a surge in shop rents. The trust owns 125 shopping centres in public-housing estates across Hong Kong. It has already sold 28 of its estate shopping malls for $11.96 billion over the past three years.
Link Watch chairwoman Sophia So Lok-yee says the sale represents a shift in Link Reit’s strategy. The shopping centres previously sold by Link were mainly in remote areas with few tenants and visitors, as well as little investment from the trust to improve them, she says. However, the latest batch includes properties such as Kwai Fong Plaza, as well as malls bought from the private market like Lions Rise Mall.
“These malls are not just commodities,” she says. “There are real people living around them and relying on them, and their interests are being sacrificed.”
Gaw Capital chairman Goodwin Gaw says the malls will continue to serve communities. “We hope to evolve these malls into refreshed and renewed centres of local life.”
Hong Kong chief executive Carrie Lam has hinted at a possible government-led legal battle against Link Reit, which has taken over government-owned malls and markets.
In July, Link Asset Management said it intended to strategically review of its property portfolio to maximise its value, appointing Cushman & Wakefield, HSBC and UBS to assess options.