For second year, major Hong Kong REIT buys back shares

The announcement that one of the region’s largest REITs is buying back shares again, comes after the company sold 17 malls for nearly $3 billion.

According to the South China Morning Post, Link REIT will buy back 80 million shares for a cost of $743 million — the calculation was based on Wednesday’s closing price, which dipped 0.7 percent after the announcement. Last year, the REIT bought back 64.5 million of its shares.

Considered among the largest REITs in Asia, Link reportedly owns 109 retail properties, more than 60,000 parking spaces and also manages office buildings with tenants such as JPMorgan Chase.

Last year, a consortium led by Hong Kong-based Gaw Capital Partners, which included Goldman Sachs and China Great Wall Asset Management, made a deal to buy 17 malls from Link for $2.9 billion in what became Hong Kong’s largest ever retail transaction. (According to Reuters, Blackstone had also been interested in Link’s retail assets.)

“The sale of properties had led to a drop in distributable income by 8 per cent,” CGS-CIMB Securities director Raymond Cheng told the Post. “To offset the negative effect on dividend per unit, Link would undergo share buy-backs every time after it sells assets to reduce the number of shares.”

Link’s total revenue exceeded the forecast by more than 8 percent, while its total property income grew 9.6 percent compared to last year. The company told the Post it had no plans to sell more assets. [SCMP] — Erin Hudson