Moody's upgrades Link's ratings to A2; outlook stable

Approximately US$270 million of debt affected

Moody's Investors Service has upgraded The Link Real Estate Investment Trust's ("The Link ") issuer rating and senior unsecured debt rating to A2 from A3. The outlook for the ratings is stable.

This concludes the rating review for possible upgrade which commenced on 23 August 2010.

RATINGS RATIONALE

"The rating upgrade reflects The Link's resilience in the down-market as evident in its continuous revenue growth -- 10.8% y-o-y increase in FYE 3/2010 - and high occupancy rate -- 90.6% in FYE 3/2010 from 87.4% in FYE 3/2009," says Peter Choy, a Moody's Vice President and Senior Credit Officer. "Furthermore, Moody's expects this trend to continue over the next few years."

"Moreover, The Link's focus on asset enhancement, rather than growth through acquisitions, supports its A2 rating," says Choy.

"The Link has also improved its liquidity through increasing its undrawn committed bank facilities. In addition, it has improved its capital structure by spreading out its debt maturity dates," says Choy.

On the other hand, the A2 rating recognizes its geographic concentration in Hong Kong and the quality of its assets inferior to high street malls.

"However, even though The Link focuses its investment in Hong Kong, it has a diversified tenant base," says Choy, adding, "Its asset enhancement programs have facilitated improvements in its tenant mix and hence revenue growth."

"This strategy has resulted in low debt leverage - EBITDA/interest of 5.5x and Debt/EBITDA of 3.4x as of 31 March 2010 - which is likely to be sustainable," say Choy.

The stable rating outlook reflects Moody's expectation that The Link will maintain its current strategy of a low level of debt gearing, its focus on asset enhancement initiatives, and its cautious approach towards acquisitions.

Upward rating pressure could be limited in the near term after this rating upgrade.

But in the medium term, upward rating pressure may emerge if the company stays focused on its current business strategy and completes more asset enhancements to improve asset quality and revenue.

On the other hand, downward rating pressure may evolve if (1) the company pursues aggressive debt-funded acquisitions; or (2) it fails to complete its asset enhancement program within budget, or to achieve expected returns, such that EBITDA/Interest coverage falls below 3.5 --4.0x, Debt/EBITDA rises above 5.0x, and Debt/Total Tangible Assets is above 30%.

The last rating action on The Link was taken on 23 August 2010 when Moody's placed its ratings under review for possible upgrade.

The principal methodology used in rating The Link was Global Rating Methodology for REITs and Other Commercial Property Firms, published in July 2010. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

The Link Real Estate Investment Trust listed in Hong Kong in November 2005. It owns and manages 149 integrated retail and car park facilities, 2 stand-alone retail facilities, and 29 stand-alone car parks.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.