07 Jun 2017

Building on Core Strengths; Exploring New Opportunities

The Board of Directors (the “Board”) of Link Asset Management Limited (“Link Asset Management”), as manager of Link Real Estate Investment Trust (“Link”; Hong Kong stock code: 823), today announced the audited consolidated final results of Link for the financial year ended 31 March 2017. Total revenue grew by 5.9% to HK$9,255 million and net property income rose 7.4% year-on-year to HK$6,994 million. The Board approved a final distribution per unit of HK116.66 cents, which, together with the interim distribution per unit of HK111.75 cents, gives a total distribution per unit of HK228.41 cents for the year, an increase of 10.8% over the previous year.
Nicholas Allen, Chairman of the Board of Link Asset Management, said, “It has been an active and rewarding year, which saw significant progress in business expansion through strategic asset acquisitions and the property renovation programme. In today’s business climate, it is no longer enough to ensure that our decisions are financially sound and create value for investors alone. To be a sustainable organisation, we must create value for all stakeholders. Looking ahead, with greater focus on value creation, we will continue to establish stronger ties within the communities, enhance our standing in developing true community assets, and grow our business prudently.”
George Hongchoy, Chief Executive Officer of Link Asset Management, said, “Building on our core strengths in asset management and enhancement, we have evolved our business model over the last two years by refining our portfolio through disposals, capitalising on new opportunities via acquisitions and development. These growth drivers have yielded significant accomplishments and contributed to another year of strong performance. We will expand the number of properties managed under the asset management model to over 40 assets in Hong Kong and Mainland China. This model enables us to identify opportunities to enhance portfolio value while prioritising and streamlining work across multiple properties.”
“Looking forward, the retail market in Asia should improve over the next year. We will continue to capture value from our existing portfolio while exploring opportunities to upgrade our portfolio further to secure long term growth.”
During the year, we completed nine asset enhancement projects, all exceeding our return on investment target of 15%. At Butterfly Plaza, the revitalised fresh market became the new anchor for the shopping centre. The newly rebranded TKO Gateway offers new layout, designs and upgraded retail offerings, which have attracted shoppers from catchments beyond the Tseung Kwan O area.
Renovation works are in good progress at 700 Nathan Road, which will become a new retail landmark in Mong Kok. The tower portion will be an ideal place for services and semi-retail trades, while the newly-designed podium will provide a young and vibrant shopping environment with mass market retail and restaurant offerings.
In Mainland China, both EC Mall in Beijing and Link Square 1 & 2 in Shanghai were fully occupied. Retail reversion rate was 37.1% for EC Mall and office reversion rate was 10.8% for Link Square 1 & 2 during the year. Subsequent to the financial year end, we acquired Metropolitan Plaza at Guangzhou’s Liwan district, marking another significant addition to Link’s Mainland China portfolio. Since the completion of the transaction, the property has been contributing to our earnings.
Construction works at The Quayside, our joint venture project with Nan Fung Development Limited at 77 Hoi Bun Road in Kowloon East, have been progressing well. We have successfully confirmed J.P. Morgan as an anchor tenant, which has agreed to pre-lease at least a quarter of the office space.
As part of our disposal strategy to recycle capital, we successfully completed the disposal of 14 assets during the year, all achieving sale prices above valuation.
We achieved a year-on-year reduction of 2.7% in annual energy consumption, and the cumulative reduction since 2010 amounted to 28.2%, which moves us closer to our 2020 target of a 30% reduction against our 2010 baseline.
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