Link Real Estate Investment Trust (823) H2 2026 earnings summary

Executive summary

• Focus shifted to core retail malls and car parks in APAC, with over 90% of assets in these segments and a commitment to keep non-core activities below 20% of the balance sheet.

• Strategy centers on reinvigorating the core portfolio, divesting non-core assets, and opportunistic share buybacks to enhance unitholder returns.

• Management streamlined operations, adopted disciplined capital allocation, and emphasized cost optimization and portfolio recycling.

• Remain confident in the mid- to long-term outlook despite ongoing market uncertainties.

• Revenue declined 2.0% year-over-year to HK$13,938 million, with net property income (NPI) down 3.7% to HK$10,230 million, mainly due to negative rental reversions in Hong Kong and the Chinese Mainland.

Financial highlights

• Net property income declined 3.7% year-over-year to HK$10.2B, mainly due to negative rental reversions in Hong Kong and Chinese Mainland portfolios.

• Distributable amount per unit fell 6.4% to HK$6.5 billion, with a final dividend of HK$2.54 per unit.

• Staff and G&A costs reduced by 14.5% year-over-year, surpassing the annualized savings target of HK$200 million.

• Portfolio valuation at HK$216 billion, down about 4% year-over-year, reflecting lower rental assumptions in some markets.

• Revenue for FY2025/2026 was HK$13.9B, down 2.0% year-over-year.

Outlook and guidance

• Negative rental reversions in Hong Kong and Chinese Mainland expected to persist through 2026-2027 due to lease renewals from higher post-COVID levels.

• Full-year benefits from cost optimization initiatives to be realized in the next fiscal year, supporting earnings stability.

• Management remains confident in the mid- to long-term outlook, citing exposure to Asia’s growing consumer markets and a strong balance sheet.

• Proceeds from non-core asset sales to be used for share buybacks when valuations are attractive.

• Aim to stabilize earnings in 2026/2027, but uncertainty remains due to global geopolitical risks and inflationary pressures.