Higher rents boost Link Reit half-yearly income

PUBLISHED : Thursday, 10 November, 2011, 12:00am
UPDATED : Thursday, 10 November, 2011, 12:00am


Shares in The Link Real Estate Investment Trust yesterday jumped to a 52-week high after it announced half-yearly net property income to September 30 jumped more than 15 per cent on the back of high rents.

The Link Reit, which owns more than 180 shopping centres and car parks formerly owned by the Housing Authority, said its total distributable income in the six months was HK$1.42 billion, up from HK$1.17 billion the previous year. Net property income jumped 15.6 per cent to HK$2.04 billion.

The rise in income was fuelled by higher rents, improving occupancy rates, increasing contributions from renovated properties that generate higher rents, and more shoppers attracted by a wider variety of shops.

The impressive results pushed up the stock 3.48 per cent to HK$28.55. The reit declared an interim payout of 63.11 HK cents per unit, up 19.4 per cent year on year.

George Hongchoy, chief executive of The Link Management, the manager of The Link Reit, attributed the solid first-half earnings to the strong performance of its portfolio and cost management efforts.

The reit's occupancy rate stood at 92.1 per cent while its gearing ratio was 16.7 per cent as of September 30.

'The improved performance reflects growing demand for shop space from retailers ... to capture the expanding business opportunities [the properties offer],' he said.

With a cash reserve and bank borrowing of more than HK$4 billion, he said the company would continue to seek other acquisitions to enlarge its portfolio.

'We will be interested in regional private shopping malls that allow us to achieve a short-term enhancement in value.'

The average monthly rent per square foot at Nan Fung Plaza in Tseung Kwan O rose 3.7 per cent after it bought the 176,000-square-foot retail complex for HK$1.7 billion in June. It was the first acquisition made by The Link since it was listed on the stock exchange in 2005.

Chairman Nicholas Sallnow-Smith said the acquisition of the Nan Fung Plaza opened up new expansion opportunities.

'We will pursue this expansion strategy prudently when we can find value-enhancement opportunities in the local retail property sector,' he said.

The Link Reit said repairs at Choi Yuen Plaza in Sheung Shui had been completed and renovations were under way at seven other sites, which will cost HK$750 million.

Seven more projects, at various stages of completion, would cost HK$602 million.