Citigroup has issued a research report stating that LINK REIT (00823) has announced the sale of a 50% stake in the building at 100 Market Street, Sydney, to Australian pension fund Aware Super for a total of A$225.9 million (approximately HK$1.24 billion). This price accurately reflects 50% of the property's valuation of A$451.75 million as of May 2026 (and its book value as of March 2026).
The transaction remains subject to anti-trust approval, expected within 6 to 9 months, after which LINK REIT will continue to provide management services. The bank has reiterated its "Buy" rating with a target price of HK$44.8.
The report suggests this partial sale, in terms of deal structure and pricing, is slightly below investor expectations, as the market had anticipated a moderate premium. The A$451.75 million valuation represents a decline of approximately 34% from the original acquisition price of A$683 million in December 2019, reflecting a market re-rating and a reset capitalisation rate to 6.5%.
Nevertheless, with rising Australian interest rates affecting buyer sentiment, a sale at book value is considered reasonable and pragmatic. It helps reduce exposure to non-core assets and strengthens capital recycling and portfolio restructuring.
The proceeds from the sale could be used for share buybacks or for investment into core retail assets in the Asia-Pacific region, potentially enhancing the upside of the existing HK$1.5 billion buyback program.
Citigroup notes that given LINK REIT's ongoing efforts in capital recycling, execution of buybacks, stable current rents for Hong Kong retail properties alongside tenant sales, and the appointment of a new Chief Executive Officer, the firm views LINK REIT as offering an attractive total shareholder return (approximately 7.7%), with fundamentals having bottomed out.
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