Link REIT 0823

Link REIT 0823

Postby winston » Wed Jul 30, 2008 12:07 pm

Not vested.

TA KUNG PAO

-- The Children's Investment Fund, partial shareholder of The Link REIT 0823.HK -- management firm of public estate shopping arcades and car parks -- has significant first year losses of about U$1 billion and it is said to be possibly selling its holding in The Link for cash.

The Link's chairman said the two sides had not had such discussions.
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Re: The Link REIT 0823

Postby winston » Fri Dec 19, 2008 8:46 am

INTERVIEW-Hong Kong's Link REIT lives up to recession-proof tag

* pushing ahead with rent rises despite political pressure
* wants to refinance $350 mln of loans in early 2009
* floats idea of acquisitions

By Dominic Whiting

HONG KONG (Reuters) - Three years after Link REIT 0823.HK launched the world's biggest property trust IPO, the package of shopping malls serving Hong Kong's poor seems to be living up to its original billing as recession-proof.

While property trusts across the world slumped from mid-2007, because of debt refinancing concerns and falling asset prices, Link REIT units held steady until they were caught in the mass stock sell-off after the failure of Lehman Brothers in September.

Now, after a 19 percent fall in three months, analysts tout the trust's good value at a 6 percent forecast yield for 2009, especially because many retailers in its malls sell necessities -- rice, toothpaste, frozen Chinese dumplings.

A worry for investors is public pressure to cut rents, to help small shopkeepers as Hong Kong wallows in recession.

This week some politicians proposed the government buy a stake in Link REIT to gain influence at 151 shopping malls that it privatised in a $2.5 billion initial public offering in late 2005.

But while some 100 Link REIT tenants demonstrated outside, the city's legislative council voted the motion down.

The trust's chief executive, Ian Robins, who was grilled by politicians on Tuesday, told Reuters he would keep raising rents to market levels from the discounted rates charged when the buildings were government-run.

But a programme to refurbish shabby malls, and marketing campaigns, should help tenants increase revenue, he said.

"It's not about sending our tenants broke, we just want to get rents to market," said Robins, adding that after his legislative council experience, he was "sensitive to feedback."

The Link REIT charged an average 30 percent more for three-year leases that were renewed in the six months to the end of September. Another fifth of leases are due to expire before the end of March 2009.

While top-notch Hong Kong office and retail rents, which have soared in the last couple of years, are expected to drop by as much as 40 percent next year, Robins said the Link REIT's properties, in public housing estates, were very different.

"These guys haven't seen big increases for a long time," said Robins, declining to give the size of upcoming rent rises.

"It'll be whatever the market's going to bear," he added. "But there are difficult markets out there, I get that."

THUMBS-UP

Analysts are positive on the stock. Citigroup, UBS, JPMorgan and CLSA all have "buy" or "overweight" tips, with price targets of HK$15.70-HK$19.60 -- at least 17 percent more than its HK$13.36 unit price on Thursday.

CLSA analyst Aaron Fischer believes the Link REIT is Asia's most "defensive" property stock.

"It's a great story," Fischer said. "Sales for food and beverage, supermarkets, and things like cosmetics are not volatile," he added. "And sometimes you see consumers trading down, going from high-end malls to low-end malls."

The unit price could come under pressure if hedge funds, pressured by redemptions, need to cut their holdings. London-based The Children's Investment Fund is a major investor with an 18 percent stake worth slightly less than $1 billion.

But Robins, who has recently met investors in London, New York and across Asia, said the forced selling had already happened in September and October.

"Hedgies have largely gone off the register," he said, referring to hedge funds. "I've been round to a lot of investors, and a lot have strategic thinking, a three- to five-year view...A lot are supporting the stock, they like the defensive value."

The trust is lowly geared, with a debt to equity ratio of 23 percent, and four fifths of that debt is at fixed interest rates. About $350 million needs to be refinanced by August 2009, and Robins said he wanted to obtain a bilateral or syndicated Hong Kong bank loan early next year, hopefully with a five-year term.

After thriving for five years, most Singapore, Japanese and Australian REITs have seen their share prices slump this year, making growth through asset acquisitions almost impossible.

The Link REIT is now trading at 380 basis points above local 10-year bonds, rather than at the negative spread seen in its first two years as a listed company. But Robins said if he kept the cost of capital down, acquisitions would be possible, although he declined to give any details.

"Opportunities will come up over the next 24 months, and we want to be in a position to consider them," he said.

Source: Reuters
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Re: Link REIT 0823

Postby winston » Sun Dec 21, 2008 9:30 am

20081216 Macquarie The Link REIT (Outperform) - LegCo is voting - implications
LegCo is voting - implications

Event

The Legislative Council (LegCo) in HK is expected on Wednesday, 17 December, to vote on a non-binding Motion that has the effect of urging the HK government to buy back 25% of Link REIT. Even if the vote is successful, we would be astounded if the government seriously considers such a move. We have included the actual Motion to be voted upon on pages 2 and 3.

Impact

As the HK fiscal budget moves into deficit, would the HK government really spend and lock up US$1bn? In 2009, the HK fiscal budget is likely to slip into deficit as the current downturn intensifies, it increases spending, and its tax base from fewer land sales and lower individual and corporate profits take effect. Buying 25% of Link REIT would do little to stimulate a slower economy, would cost ~US$1bn and would lock those funds up indefinitely.

Would tax payers view favourably a sale at HK$10.30/sh in Nov 2005 (Link IPO) and buying back at ~HK$14/sh in Dec 2008? We think such a move would be unpalatable to most, particularly given the current economic circumstances. In addition, in our view, the share price would come under long-term pressure if the government was to be a major shareholder, leading to the erosion of the value of its potential stake.

What about corporate governance? The government as a major shareholder would need to drive rents higher. If the government was to own part of Link REIT and have a board presence, it would have a responsibility to drive rents arguably just as hard as institutional or individual shareholders. This would defeat the purpose of taking such a stake in the first place, considering LegCo's Motion. It would put the government in a very difficult position.

Earnings revision

No change.

Price catalyst

12-month price target: HK$22.46 based on a DDM methodology.

Catalyst: Ongoing rental growth and the outcome of political related issues.

Action and recommendation

Political pressure is mounting on Link REIT. While the LegCo Motion may be passed, the HK government is unlikely to give it serious consideration, in our view. However, it highlights the fact that Link is likely to come under continued political pressure as HK's economy deteriorates. Despite this, we do see Link as better placed to achieve positive rental reversions vs its higher-end peers given lower absolute rental levels in its portfolio and its reliance on a higher proportion of staple-oriented tenants.

Link will continue to outperform, in our view, until such time that the broader property listed market stages a sustainable recovery. We do not see this happening until towards the end of 1H09. We maintain our Outperform rating and HK$22.46 price target.
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Re: Link REIT 0823

Postby winston » Tue Dec 30, 2008 7:11 am

Not vested. From Dr. Check:-

One very defensive play investors might want to focus on is The Link REIT (0823), which manages over 10,000 leases in 180 retail and carpark facilities.

With approximately 11 million square feet of retail space and around 80,000 carpark spaces, it hold the largest portfolio of retail properties in Hong Kong .

These properties are on the doorstep of nearly 40 percent of Hong Kong 's population.

Dr Check was pleasantly surprised during a recent visit to one mall after an absence of two years.

The Link had improved the mall in terms of variety (more different types of shops), quality (more famous brand names) and capacity (fully utilizing space in the mall). The company has maximized the value of its properties and done a good job on behalf of its shareholders.

Higher overall rental income has benefited stockholders.

Old tenants who cannot afford higher rents have the choice to relocate to less attractive shops inside the mall. But improved signboards point long-time customers to their new location.

Recently, the government was urged to buy back a 25 percent stake in the Link REIT. This followed complaints that surging rents were hurting small shops.

Some said the Link had lost its reputation, the tenants their business and the government its integrity.

I disagree.

Better management and communication between Link management and tenants have helped solve many problems.

Besides, the Link is planning to spend HK$1.6 billion to upgrade 26 shopping centers, a move that will create 4,600 construction jobs.

Macquarie gives the Link a target price of HK$22.46 as it is yielding 5.8 percent.

The stock, which closed at HK$12.96 yesterday, is seen as a high quality and low-risk defensive investment.

Source: The Standard HK
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Re: Link REIT 0823

Postby winston » Fri Jan 16, 2009 3:06 pm

DJ MARKET TALK: Link REIT Top Pick In Asian Ppty Sector -CLSA

1214 [Dow Jones] STOCK CALL: CLSA says Link REIT (0823.HK) remains its top pick in Asian property sector, keeps Buy rating, target HK$19.60. Says Link REIT driving above-average rental growth via aggressive asset-enhancement initiatives, effective tenant-mix strategies.

Notes Link REIT targets low-end retail segment with no exposure to residential, office properties, making it safer play in volatile markets. Notes Link REIT hires George Hongchoy to replace Chew Fook Aun as CFO, says Hongchoy has vast experience in banking, well-suited for post.

Says senior management appears to be committed to restructuring operations by hiring experienced individuals. Link REIT down 1.4% to HK$13.80 vs HSI's 0.1% rise.

Source; Dow Jones Newswire
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Re: Link REIT 0823

Postby winston » Sun Jan 25, 2009 7:37 pm

20090116 Macquarie The Link REIT (Outperform) - New appointments and Moody's downgrade
Stock: 823 HK
Name: The Link REIT
Price: HK$14.20
Market Cap (m): HK$30,727
Market Cap (m): US$3,961
Current valuation (DCF): HK$22.46
12mth price target: HK$22.46
Recommendation: Outperform

Event
The Link REIT (Link) announced that Mr George Kwok Lung Hongchoy will replace Mr Chew Fook Aun as Link's CFO with effect from 16 January 2009. Mr Chew's resignation was announced on 8 December. Link also made three other senior level appointments.

Furthermore, Moody's recently downgraded Link's senior unsecured debt rating from "Positive" to "Steady" but maintained its corporate family rating of "A3".

Impact

Mr Hongchoy joins Link with over 20 years experience in investment banking and financial services. His last post was as Head of DBS Asia Capital Limited until December 2008. Mr Hongchoy was also previously employed by NM Rothschild & Sons and JP Morgan Securities. We believe one of Mr Hongchoy's first tasks should be using his banking experience in helping Link to refinance its ~HK$2.7bn of notes and bank loans due in early August 2009.

Link also appointed Mrs Maria Wong as Head of Leasing and she will be responsible for managing retailer relationships, asset enhancement and retail planning. Mrs Wong has over 25 years experience in retail and property in Hong Kong and was a Property Director - Retail at AS Watson & Co. Mr Leslie Yee was appointed Head of Research and Funds Management. He was previously at Goldman Sachs in Singapore and will also take an active role in Investor Relations. And Ms LK Lam was promoted to the role of Director of Corporate Communications and Strategy.

Moody's also downgraded Link's senior unsecured debt rating from "Positive" to "Steady" but maintained its corporate family rating of "A3". We understand the downgrade was predicated on concerns that Link may face higher interest charge on its HK$2.7bn in debt scheduled to be refinanced early August 2009 and the expected downward pressure on retail rents in the current slowdown.

Our economists forecast GDP growth at -2.5% for 2009, and given retail rentals strong correlation to GDP, we expect overall retail rental growth to decrease 20% YoY in 2009. We still expect Link to generate YoY DPU growth of 11% YoY and 7% YoY in FY3/09 and FY3/10 respectively, highlighting the REIT's ability to generate positive rental reversions despite the slowdown in retail sales. This is due mainly to the fact that a large portion of retail assets are still currently leased at under market rates and from positive rental reversions generated from newly refurbished space.

Action and recommendation

We reiterate our Outperform rating on The Link REIT and maintain the stock as our top Hong Kong REIT pick. Its new senior appointments will take time to bed in, but should ensure longer term the REIT is in good stead. Despite Moody's downgrade in outlook, we believe Link's conservative balance sheet and previously under-managed portfolio means that a significant portion of assets remain at below market rates - suggesting the possibility of rental reversions even in more difficult markets.
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Re: Link REIT 0823

Postby winston » Fri May 29, 2009 6:58 am

Not vested. From Dr. Check, The Standard HK:-

If you are really looking for a value play, focus on The Link REIT (0823), which offers a 4.8 percent dividend yield, remaining a safe choice for investors.

The Children's Investment Fund continues to hold a 15.96 percent stake in The Link even though it has been a laggard for the last two months
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Re: Link REIT 0823

Postby winston » Thu Jun 04, 2009 7:21 am

Not vested. From Dr. Check, The Standard Hk:-

Now London-based TCI is shedding its stake in The Link REIT (0823). It is steadily reducing its stake from 18.47 percent to 14.9 percent. Perhaps, this is a good chance to buy. The Link manages 180 retail and car park facilities.

These retailers mostly target middle- and working-class citizens whose purchasing power has not been seriously affected by the current financial crisis.

HSBC has a HK$18.30 target on The Link and expects a dividend yield of 4.9 percent based on the REIT's closing price of HK$16.28 yesterday.
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Re: Link REIT 0823

Postby stilicon » Thu Jun 04, 2009 5:36 pm

At HK$ 13,50 - 14,00, the LINK REIT could be a decent value play. Above HK$16, I think it is a bit expensive.
Don't you think that there are better things in singapore ? Even after this recent huge reval of the S-REITs. Capitacom (C61U), for one, has a better (prospective ...) yield, a better P/B, etc. I would also put ASCENDAS REIT (A17U) as a better value play now.
One thing I have difficulties with the LINK REIT is their numerous leaseholds, with about 50 years remaining. I find it hard to squeeze into a DDM valuation ! I am curious to see how HSBC get to HK$18,3.

Anyway, for the moment, I think they have all being pushed too far by some hot speculative money.
If the market turns down during the summer, maybe reits could be interesting again.
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Re: Link REIT 0823

Postby winston » Mon Oct 05, 2009 2:43 pm

Not vested.

DJ MARKET TALK: BOCI Likes Link's Strong Rental Income,Div Growth

1355 [Dow Jones] STOCK CALL: BOCI tweaks Link REIT (0823.HK) target price to HK$21.50 from HK$21.30; keeps Buy call. Expects Link to continue posting strong rental income, DPU growth as it benefits from gradual completion of asset enhancement incentives; forecasts DPU CAGR of 10% for next 3 years.

Yielding 5.4%-6.6%, "we believe The Link REIT provides a steady income stream and an upside from the further upgrade of its shopping malls," BOCI says. Adds, overhang from TCI's disposal largely reduced, as U.K. hedge fund has sold 7.4% stake in past 6 months, trimming stake to 11.0%, which equals about 1-month trading volume.

Source: Dow Jones Newswire
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