Link REIT Plans HK$2 Billion Unit Buyback in Second Half
Key Facts
Link REIT announced its interim results on November 12, 2026, for the six months ended September 30, and said it plans to buy back units worth between HK$1 billion and HK$2 billion in the second half of fiscal 2026/2027, subject to unit valuations remaining attractive. The plan follows buybacks of about HK$1.5 billion in the first half, covering about 38.3 million units at an average price of about HK$38.5 per unit. The official disclosure linked the purchases to surplus capital and attractive valuations. The results also showed a divergence between declines in revenue and net property income and an increase in distribution per unit. Net property income fell 0.8% to HK$5,135 million, while interim distribution per unit rose 0.3% to 127.25 cents.
Distributable amount totaled HK$3,295 million, up 0.4% from HK$3,283 million in the same period a year earlier. Distribution per unit rose to 127.25 cents, compared with 126.88 cents a year earlier, a modest increase against the decline in revenue. Revenue fell 1.6% to HK$6,909 million from HK$7,023 million. This reflects operating pressure that did not prevent the trust from recording slight growth in both distributable amount and distribution per unit. The figures highlight the gap between property performance during the period and the amount the trust made available for distribution to unitholders.
Link REIT attributed the revenue decline to negative rental reversions in its Hong Kong retail portfolio, amid a delayed recovery in non-essential goods trade and a continuing shift in consumption patterns toward online channels. Occupancy in the Hong Kong retail portfolio was 97.0% on September 30, while tenant sales fell 0.2% year on year in the first half. The combination of relatively high occupancy and falling sales means pressure on income is not limited to vacant space. The company also cited a marginal improvement in net property income, supported by cost management and operating efficiency. A key expense-cutting measure was a 20.8% decline in general and administrative expenses to HK$365 million from HK$461 million in the corresponding period, with the period benefiting fully from organizational streamlining measures.
The chairman said the trust's income could continue to decline gradually, particularly in Hong Kong retail, which represents about half of the portfolio. He added that early signs of stabilization had emerged in parts of the core portfolio, but did not expect distributions to remain stable going forward. The buyback plan is part of a broader strategy announced by management to focus on the core portfolio, sell non-core assets and buy back units when their price is attractive. In the financial year ended March 31, 2026, total distributable amount fell 6.4% to HK$6,577 million, and annual distribution per unit declined 6.9% to 253.61 cents. Revenue and net property income fell 2.0% and 3.7%, respectively, in that year, with the company attributing the declines mainly to negative rental reversions in Hong Kong and mainland China.
After the period ended, Link REIT agreed to sell 700 Nathan Road in Hong Kong for HK$2.3 billion and five logistics assets in mainland China for 1.1 billion yuan, while continuing to manage the first property after the sale. Net gearing was 23.3% at the end of September, while the average all-in borrowing cost rose to 3.29% from 3.22% in the previous first half. The chief financial officer said the trust would continue to consider buybacks when surplus capital is available and the unit price is at an attractive valuation. In afternoon trading on November 12, the trust's units rose 3.73% to HK$41.7, their highest level in more than five months. The record date for interim distribution beneficiaries is November 26, 2026, with payment due on December 31, 2026.