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2026-11-02 11:34:22 UBS published a research report stating that LINK REIT (00823.HK) has sold properties for the third time this year. Last Friday (30th), it announced the sale of T.O.P at 700 Nathan Road, Mong Kok to a local buyer for HKD2.3 billion, representing discounts of 9% and 13% respectively to the book values in Sep 2026 and Mar 2026. LINK REIT (00823.HK) acquired the property in Feb 2016 for HKD5.91 billion. The property, formerly the Trade and Industry Department Tower, was renovated and repositioned, with a total gross floor area of about 284,767 square feet, including about 108,000 square feet of retail space and about 177,000 square feet of office space. Based on the latest net property income of HKD100 million, the transaction implies an exit yield of 4.3% and is expected to be completed on or before 29 Jan 2027. The broker noted that LINK REIT (00823.HK) also secured a five-year clawback arrangement, entitling it to share 20% of any resale value above HKD2.3 billion (calculated at a 5% annual compound rate), as well as 50% of realized deferred tax assets. On a pro forma basis, LINK REIT (00823.HK)'s net gearing ratio will decline from 25.6% to 24.8%. As the asset accounted for only about 1% of net property income for FY2026 ended Mar this year, the broker expects limited impact on distribution per fund unit. If the proceeds are used for unit buybacks, distributions could be accretive, given LINK REIT (00823.HK)'s current dividend yield of 6.3%, higher than the implied exit yield of 4.3% from the transaction. The broker expects the market reaction to the disposal to be slightly positive. Looking ahead to the interim results on 12 Nov, the broker forecasts distribution per fund unit of HKD1.24, down 3% YoY. The broker maintained a Buy rating and TP of HKD47.2. (da/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |