08 Nov 2017

Building a Resilient Portfolio for the Long Term

The Board of Directors (the “Board”) of Link Asset Management Limited (“Link Asset Management”), as manager of Link Real Estate Investment Trust (“Link”; Hong Kong stock code: 823), today announced the unaudited interim results of Link for the six months ended 30 September 2017. Total revenue grew by 7.4% to HK$4,949 million and net property income rose 9.5% to HK$3,767 million. The Board approved an interim distribution of HK 121.50 cents per unit, an increase of 8.7% over the same period last year.

Nicholas Allen, Chairman of the Board of Link Asset Management, said, “The resilience of our portfolio is exemplified by our consistent growth despite the weak retail market in recent years. During the past six months, we continued this trend. On the back of this, positive growth of Hong Kong’s overall retail market for the first time since 2014 should be cause for cautious optimism for Link’s business outlook. We are undertaking a strategic review to identify ways to optimise the portfolio quality and maximise value for unitholders. Our objective is to investigate how to better utilise our growth drivers and position Link for growth over the next 10 years and beyond.”
George Hongchoy, Chief Executive Officer of Link Asset Management, said, “During the period under review, we continued to deliver strong earnings and growing returns for unitholders. Significant progress was made in executing our business strategy, marked by expanding our asset management model to the entire portfolio, completing the acquisition of Metropolitan Plaza in Guangzhou and extending our innovative approach with technology in marketing and customer service. These achievements will ensure the long-term resilience of our portfolio and improved investment performance in future years.”
Six asset enhancement projects were completed during the period, including Lung Hang Commercial Centre, T Town (formerly known as Chung Fu Plaza), Cheung Wah Shopping Centre, Kwong Fuk Commercial Centre, Fu Tung Market and Tin Tsz Shopping Centre. In addition to improving the overall shopping experience and ambience, the enhancement of T Town's north wing have upgraded the mall’s trade mix by increasing the number of shops and introducing new tenants.
Our holistic asset management model seeks to unlock additional value from each property by increasing operational efficiency, enhancing resource allocation and improving the customer experience. Given the positive results of the 12-month pilot of this management model, demonstrated in the enhanced interfacing with both internal and external stakeholders, the model has been extended to the entire portfolio with effect from 1 October 2017.
Our three properties in Mainland China continued their strong performance and contributed net property income of HK$310 million during the period, representing a 33.6% year-on-year increase.
Scheduled to start operations by the end of 2017, the majority of the tower at 700 Nathan Road has been leased, with committed tenants including clinics, a general retailer, a co-work/business centre, a beauty centre and office users. Offering a lifestyle destination for young connected shoppers, the property's podium has also secured an anchor tenant. This is another example of Link’s innovative approach which positions this property as a multi-faceted place that truly belongs to shoppers and tenants, instead of a conventional shopping centre.
Following the announcement of J.P. Morgan as an anchor tenant at The Quayside, our commercial development in Kowloon East, we continue to identify and target tenants in banking and finance, as well as from multinational corporations and professional services firms.
Link recently became a signatory of the Principles of Responsible Investment, which, together with our active contributions to various United Nations working groups, ensures we maintain a long term value-creating strategy to benefit our stakeholders.
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