Link rewards investors after surge in rents
The Link Real Estate Investment Trust plans to pay a higher dividend than promised at its initial public offering 18 months ago, as increased rental income buoyed Hong Kong's biggest property trust.
Link Reit, which manages 180 retail and car-park properties formerly owned by the Hong Kong Housing Authority, yesterday proposed a full-year payout of 67.43 HK cents to shareholders, 9.2 per cent more than the amount committed to at its launch.
Total distribution income was HK$1.44 billion for the year to March as rental revenue was lifted by improvements at its shopping centres.
'We see many opportunities to grow returns to unit holders,' chairman Nicholas Sallnow-Smith said.
Mr Sallnow-Smith replaced Paul Cheng Ming-fun, who earlier this year resigned over a disagreement with the Link's largest unit holder, the Children's Investment Fund Management (UK), over the pace of rent increases.
Mr Sallnow-Smith yesterday did not say if the trust was under pressure from the fund to raise rents and returns. But he said the company had no plans to dispose of any assets.
The Link will add 11 shopping centres, bringing its approved projects to 26. Total capital expenditure for these centres will reach HK$1.2 billion by 2010.
This is the first time the company has announced full-year results since listing in November 2005.
Revenue was HK$3.95 billion, compared with HK$1.35 billion over the months from September 2005 when the reit was established.
The distribution yield calculated on the closing unit price of HK$18.80 on March 31 was 3.59 per cent. The firm said it expected double-digit growth in rents in this business year, helped by an improved business environment at its shopping centres.
'Enhanced business opportunities are attracting more tenants who in turn bring in even more patronage,' said chief executive Victor So Hing-woh, who last month said he would step down for health reasons.
Occupancy rates at the shopping centres for the year stood at 90.3 per cent, compared with 91.2 per cent at the end of March last year. The retention rate was 78.7 per cent, against 93.4 per cent.
The lower retention rate implied that the management had decided not to renew below-market leases with existing tenants, UBS analyst Eric Wong said.
The Link's 960,000 square metres of retail space makes it the biggest owner of retail floor space in Hong Kong. Its portfolio of 79,000 car park spaces is also the largest in the city, according to UBS.
Shares of the reit fell 1.23 per cent yesterday to HK$17.70 but were up 6.6 per cent from January.