LINK REIT has been on the financial news in late 2022 after its recent headline-worthy acquisitions. The deal will include Jurong Point and Swing By @ Thomson Plaza which is expected to complete by March 2023. However, many Singapore investors may be a little foreign to this REIT as it is listed in the HK Stock Exchange. 

Hence, we hope to take this opportunity to share more about the largest REIT in Asia. 

Link REIT has properties in four majority categories. 1) Retail 2) Office 3) Logistics and 4) Car parks and related business. The properties are located in Hong Kong, Mainland China, Australia and the United Kingdom. As at 2023, its total portfolio size stands at 152 investments totalling approximately HK$234 billion. 

Overview of Link REIT Business

Overview of Link REIT Business in 2022
Source: Link REIT Annual Report 2022

Key highlights of Link REIT Portfolio:

  • 152 Properties
  • Geographic breakdown:
    • 130 (Hong Kong), 12 (China), 10 (Australia and UK)
  • Portfolio Size: HK$234 billion

Link REIT Gross Revenue & Net Property Income

Source: Annual Report 2022

Gross Revenue for FY22 rose to HK$6.04 billion from FY21 HK$5.78 billion. The Compound Annual Growth Rate (CAGR) of Link REIT’s Gross Revenue over 5 years amounted to 5.22%. Gross Revenue by geography from its properties are 73.1% in Hong Kong, 10.6% in China, 16.2% in Overseas and Others as at FY22.

Source: Annual Report 2022

Net Property Income (NPI) for FY22 rose to HK$4.59 billion from FY21 HK$4.39 billion. Both increase in Gross Revenue and Net Property Income (NPI)  for FY21 was largely attributable to the steady top-line growth and new contribution from Australian retail and office properties. The Compound Annual Growth Rate (CAGR) of Link REIT’s NPI over 5 years amounted to 5.10%.

Link REIT‘s Distributable Income & Distribution Per Unit

Source: Annual Report 2022

Distributable Income for FY22 maintained steadily at HK$3.27 billion from FY21 HK$3.34 billion. The Compound Annual Growth Rate (CAGR) of Link REIT’s Distributable Income over 5 years amounted to 4.40%.

Source: Link REIT Annual Report 2022

Link REIT’s Distribution Per Unit (DPU)  has climbed by a remarkable 4.46% per annum since FY2018. It has been providing a steady average DPU of HK$1.46. Rising financing costs and the lack of a discretionary distribution have dampened DPU growth.

Link REIT‘s Gearing Ratio & Property Yield

Source: Annual Report 2022

Gearing Ratio rose to 22.7% for FY22 from 22.0% in FY21. This is due to the new Australian investment acquisitions that the company took to expand the business. This demonstrated that Link REIT is financially sound. It has HK$15 billion in debt headroom before meeting its gearing limits respectively.

Source: Annual Report 2022

Similarly, Link REIT property yield rose slightly due to increase in property income from their new investments. As a result, the property yield in FY22 increased to 5.7% from 4.8% in FY21.

Link REIT‘s Occupancy Rate

Source: Annual Report 2022

Occupancy rates have increased to 96.0% (FY22) from 93.8% (FY21). This is attributed to improved occupancy of the Hong Kong office portfolio, new acquisition of Hong Kong car parks and China Logistics properties. 

Link REIT‘s Interest Coverage Ratio

Source: Annual Report 2022

Link REIT debts are evenly spread out across the next decade. The Weighted Average Debt Term decreased from 3.4 years to 3.2 years (as of October 2022). Link REIT has an impressive interest coverage ratio of 6.5 times, demonstrating its solid financial health.

Link REIT‘s Rental Reversions

Source: Annual Report 2022

Link REIT Portfolio has a diversified tenant mix across its different geographic portfolio. Rental reversion for FY22 is expected to be in the positive low single-digit range. This is due to strong leasing demand for China Logistics and Hong Kong Retail properties. 

Link REIT‘s Growth Prospects

Link REIT’s growth goal is to grow a portfolio with prime assets and diversified across APAC regions. 

With a diversified portfolio and geographical, Link REIT will continue to maintain strong and steady income. As a result, it will be in a great position to benefit from these favorable conditions due to their investments. 

Link REIT Past Dividend Yield

Dividend Yield (5 Year)

The current Dividend Yield Link REIT stands at 4.70%,it’s 5-year Avg Yield stands at 3.99%

Source: Y-Charts

Dividend Yield (1 Year)

The current Dividend Yield Link REIT stands at 4.70%,it’s 1-year Avg Yield stands at 4.81%

Source: Y-Charts

Our Stand for Link REIT

Link REIT has been one of the largest and strongest REIT in asia. It has also built a long-term track record of delivering.

  • Strong historical growth in Gross Revenue
  • Favorable Lease Arrangements – Long Lease Tenure, Guaranteed Rent Increments
  • Strong future growth acquisitions

Link REIT, despite its strong fundamentals, nevertheless appears fairly valued to me, with a current dividend yield of 4.70%. Before investing, I would prefer a bigger margin of safety and a yield of about ~6-7% yield.

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