市场见解

3 Things Investors Should Know Before Buying Link REIT’s Stock

I think that Link Real Estate Investment Trust (SEHK: 823) looks like a good REIT to hold for the long term. Here’s why. –

Link Real Estate Investment Trust (SEHK: 823), also known as Link REIT, is the largest REIT in Asia by market capitalisation.

The REIT manages a diversified portfolio comprising retail facilities, car parks, and offices.

In this article, I’ll share a few useful informational points about the REIT, which should give investors a good overview of the REIT and whether it’s worth investing in.

Overview of portfolio

Source: Link REIT’s Investor Presentation

The above presentation slide gives us a quick summary of Link REIT’s business.

Overall, the REIT generates about 86% of its income from Hong Kong properties and the remaining 14% from Mainland China and Australia’s investments.

The bulk of its income (75%) are from retail-related properties, while car park and office properties account for 16% and 9%, respectively.

Digging a little further, I also learned that its retail segment generates more than half of its rental income from food-related businesses, which as a segment is more resilient to the disruption of e-commerce activities.

Latest full-year performance

The next aspect that I’ll look at is Link REIT’s latest performance for the year ended 31 March 2020.

Source: Link REIT’s Investor Presentation

There are a few points worth mentioning here. To start with, the REIT reported solid numbers with improvement across most financial metrics, as we can see from the slide above.

Such performance was commendable considering the challenges that the REIT had to face, which include the year-long protests and also the Covid-19 outbreak.

Operationally, occupancy rates remained high across the board (96.5% for Hong Kong and 97.8% for mainland China) while rental reversion rates improved by double digits for retail properties in Hong Kong and Mainland China.

Overall, it was a solid performance amid a challenging year.

Strong balance sheet

Last but not least, investors should also note that Link REIT has a strong balance sheet as of 31 March 2020. Readers can see the details below.

Source: Link REIT’s Investor Presentation

Not only did Link REIT keep its gearing low but it also diversified the borrowings into multiple currencies, as well as a mix of fixed and variable debts.

Moreover, the average debt maturity of 4.0 years allows the company plenty of flexibility to overcome any temporary challenges post by the COVID-19 outbreak.

Foolish conclusion

There you go, that was a quick overview of Link REIT’s business.

Investors who find the REIT attractive can take the next step to learn more about this REIT, focusing on areas such as new property acquisitions, asset enhancement initiatives, and more.

More reading

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.

The Motley Fool Hong Kong Limited(www.fool.hk) 2020

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