Link REIT (“Link”; Hong Kong stock code: 823), Asia’s largest real estate investment trust, today announced that it has completed the strategic review and concluded that capital recycling is the best approach to create value for unitholders. On 28 Nov 2017, Link entered into agreements with a consortium led by Gaw Capital Partners to dispose of 17 properties, through a competitive sale, for a total consideration of HK$23 billion (please refer to the list of properties at the end of the press release).
The consideration, the highest offered for the properties, represents approximately a 52% premium to the appraised value of the portfolio as of 30 September 2017 and a net disposal gain of about HK$7.4 billion.
George Hongchoy, Chief Executive Officer of Link Asset Management Limited, the manager of Link REIT, said, “As sizeable portfolios of such high-quality retail assets are hard to come by in Asia, the sale attracted overwhelming interest from international investors, including global and regional private equity funds, sovereign wealth funds, as well as local investors. The competitive bids and final sale price signify a vote of confidence in Hong Kong’s economy and retail sector, while underscoring Link’s capability in managing and enhancing assets.”
“Such robust appetite for Asian assets among global investors is bound to fuel further growth for the region’s real estate sector. As for the disposed properties, we are confident that with Gaw Capital’s expertise and experience in asset management, they will further enhance the operations of the properties to create value for stakeholders,” added Mr Hongchoy.
Goodwin Gaw, Chairman and Managing Principal of Gaw Capital Partners, said, “We and our partners strongly believe in Hong Kong’s future, and believe these malls, which Link REIT has done an excellent job in upgrading and maintaining, will continue to serve important functions in the community. We hope to utilize our experience to evolve these malls into refreshed and renewed centres of local life, and look forward to working with the community to make their neighbourhoods better homes”.
The strategic review, which was to assess options to further optimise Link’s portfolio, concluded that its current growth drivers, encompassing asset management, enhancement, acquisition, disposal and development, are well-placed to drive Link’s growth going forward.
Following the disposal of the 17 properties, Link will have about 90% of its assets in Hong Kong and 10% in Mainland China. Total portfolio value will amount to about HK$175 billion.
Proceeds of the sale will be used for new investment opportunities in Hong Kong and first-tier cities in mainland China, in addition to general working capital purposes including debt repayment and, where appropriate, unit buy-backs. Completion of the disposals will take place on 28 February 2018.
Link is one of the world’s largest retail-focused REITs and a constituent stock of the Hang Seng Index, it has a portfolio of about 10 million sq. ft. of retail space, around 69,000 carpark spaces and a Grade-A commercial tower with approximately 0.9 million sq. ft. under development in Hong Kong. In mainland China, its portfolio includes 3 million sq. ft. of retail and office space housed in three properties in Beijing, Shanghai and Guangzhou.
Link Asset Management intends to communicate with tenants, nearby residents and other stakeholders to keep them informed on matters relating to the transfer of ownership of the 17 properties.
HSBC, UBS and Cushman & Wakefield were the advisors for both the strategic review and the disposal exercise.
The 17 properties sold, pending completion of transaction on Feb 28, 2018
Properties
Cheung Hang Lions Rise
H.A.N.D.S (On Ting & Yau Oi) Kwai Fong
Kai Yip Kwai Shing East
Kam Tai Lai Kok
Lei Cheng Uk Lee On
Shek Lei Shun Tin
Tai Wo Hau Tsing Yi
Tsz Ching Yung Shing
