JPMorgan Keeps LINK REIT at Overweight With HK$43 Target, Says Singapore Mall Purchase to Slightly Lift DPU

JPMorgan has issued a research report maintaining its Overweight rating on LINK REIT (00823) with a target price of HK$43.

LINK REIT announced the acquisition of a 50.1% interest in Singapore's Tanglin Mall for S$239.5 million.

The bank estimates that, based on a net property income yield of approximately 4.5% and a Singapore financing cost of 3.25%, the acquisition will slightly boost the forecast distribution per unit (DPU) for the 2028 financial year by about 0.2%.

JPMorgan noted that LINK REIT has already divested three non-core assets this year, and this acquisition comes as a mild positive surprise. The company stated that the transaction is a capital-efficient investment and that it remains committed to capital recycling.

The bank expects that most of the proceeds from the sale of 100 Market Street in Sydney and the property at 700 Nathan Road in Hong Kong will be used for share buybacks, involving up to HK$3.5 billion, equivalent to 3.3% of LINK REIT's market capitalization, while the Singapore mall acquisition is expected to be funded mainly through debt.

However, if it is assumed that the entire acquisition consideration is paid using proceeds from the previous asset sales, the potential buyback amount could fall to HK$2 billion, equivalent to 1.9% of LINK REIT's market capitalization.