Company Reports

Link REIT provided a brief update on its operational performance for the first quarter of fiscal 2027 (ending March). Portfolio occupancy remained healthy, while rental reversions in its Hong Kong and mainland China retail portfolios stayed negative.

Link REIT is one of the world’s largest retail-focused REITs. Its portfolio consists of 154 properties across Hong Kong, mainland China, Singapore, Australia, and the United Kingdom. The Hong Kong retail properties make up over 50% of the portfolio value. Its retail space in Hong Kong can be categorized into three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique branding, while community malls are midsize, serving as local community hubs. Smaller properties are at a neighborhood level, providing essential goods and services for daily living. With the majority of its overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient district-center-type assets.

Link REIT announced the disposal of a 50% interest in its 100 Market Street office asset in Australia for AUD 226 million, in line with the asset's valuation as of the end of May 2026 and implying an exit yield of 6.5%. Link will retain the remaining 50% interest in the asset.

Link REIT announced the appointment of Neil Slater as its new CEO, effective March 1, 2027.

Link REIT's fiscal 2026 net property income declined 4% year on year, given negative rental reversions in Hong Kong and mainland China, despite generally strong occupancy levels. Distribution per unit declined 7% to HKD 2.54.

Link REIT is one of the world’s largest retail-focused REITs. Its portfolio consists of 154 properties across Hong Kong, mainland China, Singapore, Australia, and the United Kingdom. The Hong Kong retail properties make up over 50% of the portfolio value. Its retail space in Hong Kong can be categorized into three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique branding, while community malls are midsize, serving as local community hubs. Smaller properties are at a neighborhood level, providing essential goods and services for daily living. With the majority of its overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient district-center-type assets.

Link REIT provided a brief update for the nine months ended December 2025, with overall retail occupancy above 95% and Hong Kong retail rental reversion at negative 7.5%.

Link REIT's first-half fiscal 2026 (ending March) net property income declined 3.4% year on year, as the Hong Kong and mainland China retail portfolio continued to experience negative rental reversions. Interim distribution per unit, or DPU, fell 5.9% to HKD 1.27.

Link REIT is one of the world’s largest retail-focused REITs. Its portfolio contains 154 properties across Hong Kong, mainland China, Singapore, Australia and the United Kingdom. The Hong Kong retail properties make up over 50% of portfolio value. Its retail space in Hong Kong can be categorized into three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique branding, while community malls are midsize, serving as local community hubs. Smaller properties are at a neighborhood level, providing essential goods and services for daily living. With the majority of its overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient district center-type assets.

Link REIT has released its first-quarter fiscal 2026 (ending March) operational update. Occupancy remains strong at above 90% across all segments. Rental reversions in Hong Kong and mainland China continue to face pressure, partly offset by stronger performance from overseas assets.

Link REIT is one of the world’s largest retail-focused REITs. Its portfolio contains 154 properties across Hong Kong, mainland China, Singapore, Australia and the United Kingdom. The Hong Kong retail properties make up over 50% of portfolio value. Its retail space in Hong Kong can be categorized into three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique branding, while community malls are midsize, serving as local community hubs. Smaller properties are at a neighborhood level, providing essential goods and services for daily living. With the majority of its overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient district center-type assets.

No-moat Link REIT's fiscal 2025 (ended March) results were broadly in line with our expectations. However, distribution per unit, or DPU, of HKD 2.72 slightly exceeded our forecast, driven by lower taxes following a one-off tax clarification in mainland China. Our forecasts are largely unchanged and we maintain our fair value estimate of HKD 45 per unit. The units are undervalued, reflecting a 9% discount to our valuation. Our fiscal 2026 DPU forecast of HKD 2.64 implies an attractive yield of 6.5%.

Link REIT is one of the world’s largest retail-focused REITs. Its portfolio contains 154 properties across Hong Kong, mainland China, Australia, Singapore, and the United Kingdom. The Hong Kong retail properties make up over 50% of portfolio value. Its retail space in Hong Kong can be categorized into three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique branding, while community malls are midsize, serving as local community hubs. Smaller properties are at a neighborhood level, providing essential goods and services for daily living. With the majority of its overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient district center-type assets.

We maintain our HKD 45 fair value estimate for no-moat Link REIT following the trust's brief preblackout update. While Link’s Hong Kong retail portfolio tenant sales dipped 3.3% year on year for April-December 2024, this outperformed the 7.6% drop for overall Hong Kong retail sales during the same period. Occupancy remains robust at 97.1% as of December 2024, and tenant sales showed signs of stabilization, with the decline narrowing compared with the first half of fiscal 2025 (ending March), in line with our expectations. That said, management anticipates mild negative rental reversion for the Hong Kong retail portfolio in fiscal 2025-26 as the weakness in retail sales takes time to reflect in rental reversion numbers upon lease renewals. We expect this to be partly offset by positive rental reversion in the trust’s international assets. We have fine-tuned our rental growth and finance cost assumptions, leading to a 4% decline in our fiscal 2025 adjusted earnings forecast. However, our long-term estimates are largely unchanged. We continue to view Link’s units as undervalued, trading at a 16% discount to our valuation. Our fiscal 2025 distribution per unit forecast of HKD 2.57 implies a distribution yield of 6.8%.

Link REIT’s first-half fiscal 2025 (ending March) revenue increased 6.4% year on year, in line with our expectations. Growth was mainly driven by the full consolidation of Link Plaza Qibao in Shanghai, while the operating environment for its core Hong Kong retail portfolio remains challenging. That said, finance costs came in slightly lower than we expected, given debt repayment and a lower average all-in borrowing cost of 3.69%, compared with 3.78% for fiscal 2024. As such, we lowered our net interest expense assumptions and raised our fiscal 2025-26 adjusted net income and distribution per unit forecasts by 5%. We retain our fair value estimate of HKD 45 per unit, as we keep our long-term forecasts largely unchanged. With units currently trading at a 15% discount to our valuation, we think Link is undervalued, supported by a fiscal 2025 distribution yield of 6.9%. We believe this is attractive under the current interest-rate-cut cycle.

Link REIT is one of the world’s largest retail-focused REITs. Its portfolio contains 154 properties across Hong Kong, mainland China, Australia, Singapore, and the United Kingdom. The Hong Kong retail properties make up over 50% of portfolio value. Its retail space in Hong Kong can be categorized into three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique branding, while community malls are midsize, serving as local community hubs. Smaller properties are at a neighborhood level, providing essential goods and services for daily living. With the majority of its overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient district center-type assets.

We maintain the fair value estimates of Swire Properties, CapitaLand Investment, Mapletree Pan Asia Commercial Trust, or MPACT, and Link REIT after visiting their office and retail assets in Shanghai. We think China’s slowing economic growth remains a key headwind for consumer spending and business expansion. For retail malls, we note that vacancy rates for Shanghai downtown retail districts remain healthy at 5.4% as of third-quarter 2024, according to Cushman & Wakefield. This should provide some support for market rents that are being weighed down by weak retail sales performance and supply of new retail malls, albeit in the secondary retail areas. On the other hand, office rents remain soft in Shanghai given the elevated central business district vacancy rate of 16.6% as of third-quarter 2024, according to Cushman & Wakefield. While the Chinese government is looking to revive its economy with a series of policy stimulus efforts, we think that business owners and consumers may still exercise caution until they are convinced of a durable economic recovery. For landlords and REITs with mainland China exposure, our preferred pick is Swire Properties that is trading at a 29% discount to our fair value. Swire Properties remains steadfast in its long-term plan to invest in China, allocating half its HKD 100 billion investment plan to China. We expect these projects to start contributing from 2026, with the bulk of it coming from 2027.

We maintain our fair value estimate of HKD 45 per unit for no-moat Link REIT after its pre-results blackout meeting as our long-term thesis is unchanged. We think the spending leakage due to the northbound traveling trend in Hong Kong has already been priced in, and we believe that Link’s focus on nondiscretionary trades leaves its portfolio resilient through economic cycles. This underpins steady rental and distribution growth over the long term. Despite the recent unit price rally, we continue to see Link REIT as undervalued, with a 13% discount to our valuation. Our fiscal 2025 (ending March) distribution per unit forecast of HKD 2.51 also implies an attractive 6.4% distribution yield.

No-moat Link REIT’s fiscal 2024 (ending March) results were within our expectations, with 11% year-on-year revenue growth driven by full-year contribution of the newly acquired Singapore retail assets. Distributable income increased by a smaller 6% year on year due to higher financing costs. Despite the in-line results, we cut our fair value estimate to HKD 45 per share from HKD 59, and raised our Morningstar Uncertainty Rating to Medium from Low. In our view, there is a structural shift in Hong Kong residents' retail consumption habits, as traveling up to mainland China for cheaper goods and services has become a regular activity for part of the population. This creates higher operating risks for Link’s Hong Kong retail malls, as they now face greater competition for shopper traffic and tenant sales. Our updated forecasts reflect 1) weaker midcycle retail rental growth in Hong Kong; 2) margin pressure given higher Hong Kong marketing costs; 3) increased fiscal 2025-26 financing costs; 4) higher exit capitalization rates for the investment properties portfolio on the back of a higher-for-longer interest-rate environment; and 5) increased perceived risks on rentals. We also raised our cost of equity assumption to reflect Link’s higher operating risk, bringing our weighted average cost of capital to 7.6% from 6.9%.

Link REIT is one of the world’s largest retail-focused REITs. Its portfolio contains 154 properties across Hong Kong, mainland China, Australia, Singapore, and the United Kingdom. The Hong Kong retail properties make up over 50% of portfolio value. Its retail space in Hong Kong can be categorized into three subsegments. Destination or flagship properties are malls with an enhanced trade mix and unique branding, while community malls are midsize, serving as local community hubs. Smaller properties are at a neighborhood level, providing essential goods and services for daily living. With the majority of its overall portfolio in community and neighborhood malls, Link is a dominant player in the more resilient district center-type assets.