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Strategic review “milestone” for Link Real Estate
June 7, 2018
As well as positive results overall for its latest fiscal year, Link Real Estate Investment Trust says it achieved an important milestone with its strategic review and completing the divestment of 17 properties in Hong Kong.
“This marks the completion of a milestone in our portfolio upgrades and capital recycling, and provides a solid base for longer-term growth opportunities,” says the trust.
Revenue and net property income increased by 8.3 and 9.6 per cent during the year to HK$10 billion (US$1.2 billion) and $7.6 billion respectively. On a like-for-like basis excluding properties divested and acquired, revenue and net property income increased by 9.4 and 10.7 per cent year on year respectively.
Valuation of the investment properties portfolio (including property under development and renovation and properties in Mainland China) continued to improve and reached $203,091 million, representing 16.7 per cent growth. On a like-for-like basis excluding properties divested and acquired, the valuation of the investment properties portfolio (including property under development and properties in Mainland China) increased by 25.4 per cent. Net asset value per unit grew 33 per cent to $83.06.
Regarding retail, the trust says its disciplined approach to asset management has helped sustain performance in a dynamic market.
Occupancy rate for the portfolio was high at 97 per cent as at March 31. Reversion rate for the year reached 29.1 per cent, and retail rentals went up 5.3 per cent. Excluding properties divested and acquired, retail rentals grew by 9.5 per cent, reflecting the growth potential of the portfolio.
The trust’s Mainland China portfolio – comprising EC Mall in Beijing, Link Square 1 and 2 in Shanghai and Metropolitan Plaza in Guangzhou (acquired during the year) – reported solid results with total revenue of $884 million and net property income of $684 million, up respectively 54 and 49 per cent.
Since the completion of the trust’s acquisition of Metropolitan Plaza in May last year, it has enhanced the trade mix and achieved near full occupancy. As at the end of March, occupancy of EC Mall and Metropolitan Plaza stood at 100 and 99.2 per cent respectively. Reversion rate of EC Mall was strong at 29.4 per cent while that at Metropolitan Plaza was 61.2per cent.
During the year, the trust completed 14 asset-enhancement projects, all of which exceeded 15 per cent return on investment. Among them, the asset-enhancement at T Town (formerly Chung Fu Plaza) and TKO Market were major overhauls.
Upgrade and rebrand
Completed in 2016, asset enhancement of TKO Gateway involved upgrading the shopping arcade and rebranding Hau Tak Shopping Centre into a Destination Shopping Centre in Tseung Kwan O. This year, the fresh market in TKO Gateway was further upgraded with revamped market stalls, new layouts and prominent entrances. A dedicated Food Lane has been introduced for light meals and late-night snacks.
A full upgrade of Temple Mall South is a continuation of the enhancement work of Temple
Mall North. The aged and underused fresh market had been converted to a retail and F&B arcade.
The trust also refurbished three community shopping centres (Siu Sai Wan Plaza, Tsz Wan Shan Shopping Centre and Tin Chak Shopping Centre) .
This year set a record year for fresh-market upgrades. Twelve enhancement projects were completed with three under direct management and nine by external market companies.
In May last year, the trust completed the acquisition of Metropolitan Plaza in Guangzhou for RMB4 billion (US$636.1 billion).
“We see growth potential with Metropolitan Plaza,” says the trust. “It is strategically located at the core of Liwan district and has direct connection with the Huangsha metro station.
With outstanding reversion, Guangzhou Metropolitan Plaza has contributed significantly to our overall portfolio.”
The retail podium – branded T.O.P This is Our Place – is scheduled for launch this year. It will feature F&B, lifestyle and fashion and beauty brands.
Following a portfolio strategic review this year, the trust divested 17 properties for $23 billion. In aggregate, a premium of 52 per cent over their appraised value was achieved.