Property trust company to distribute HK$702m to unitholders The Link Reit, the largest real estate investment trust listed in Hong Kong, declared a better than expected first-half dividend after increasing rents when leases came due for renewal. The Link, which owns 180 shopping centres and car parks in public housing estates, announced distribution income, or underlying profit, of HK$702 million or 32.81 HK cents per unit for the six months ended September, 6.3 per cent higher on an annualised basis than the reit pledged in its listing prospectus. The company plans to distribute at least 61.76 HK cents per unit for this year to March, according to the prospectus. The reit, which was spun off by the Housing Authority for HK$22 billion, has to pay out as dividends 100 per cent of its profit attributable to shareholders. The annualised distribution yield was 6.37 per cent based on last November's initial public offering price of HK$10.30 per unit or 6.71 per cent based on the discounted offer price to the Hong Kong public of HK$9.78 per unit. The Link said in its listing prospectus it will offer an annualised yield of at least 5.53 per cent for the first year. Average rents for retail leases that came up for renewal during the first half to September rose 8.3 per cent, said Victor So Hing-woh, the chief executive of the Link Management, which manages the trust's properties. 'Every year about one-third of the 10 million square feet retail space is due for renewal,' Mr So said, while declining to forecast future rent growth. The Link is also increasing income as upgraded property becomes available. Three improvement projects are expected to be completed in 2008, with areas already rented and preparation work on 12 other projects under way. 'We are doing well as those projects that have completed asset enhancement are attracting increased traffic flows [of shoppers],' said Paul Cheng Ming-fun, chairman of the Link Management's board. The Link shares, which have gained 58 per cent since being listed, rose 1.37 per cent to close at HK$16.28 yesterday. The Link had profit of HK$1.29 billion for the six months to September. Stripping out a HK$707 million revaluation gain on investment property and a HK$7 million loss from non-cash income, underlying profit was HK$702 million. Yesterday, Mr Cheng rejected rumours that the board was seeking to replace him. 'The board still supports me as chairman,' he said. The management was working well with the representative of the Children's Investment Fund Management, the reit's biggest shareholder with an 18.35 per cent stake, he said. Distribution per unit growth of 10.7 per cent per annum would be maintained over the next three years, Daiwa Institute of Research (Hong Kong) analyst Natalie Chow said.
