Link Reit makes its first foray outside Greater China with a US$469.5 million office property acquisition in Sydney

By Sandy Li sandy.li@scmp.com / https://www.scmp.com/business/article/3042839/link-reit-makes-its-first-foray-outside-greater-china-us4695-million?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | December 26, 2019 10:53 AM SGT
Link Reit, the biggest real estate investment trust in Asia, will enter Australia by acquiring a grade A office building in Sydney for A$683 million (US$469.5 million).
The 10-storey office building, 100 Market Street, in the central business district will be bought from US private equity firm Blackstone Group, Link Asset Management, which runs Link Reit, said in a statement on Thursday.
The acquisition is Link Reit's first outside Greater China. The deal is expected to close by early next year.
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"A more diversified portfolio with overseas properties providing new sources of income will help ease our reliance on Hong Kong properties to generate income progression, and contribute to a healthier growth trajectory," said George Hongchoy, chief executive officer of Link Asset Management.
Link Reit is buying the 10-storey office building, 100 Market Street, in Sydney. Photo: Handout alt=Link Reit is buying the 10-storey office building, 100 Market Street, in Sydney. Photo: Handout
He said that the company was looking at further opportunities in Singapore, Japan and the UK, adding that Link has "no immediate plan to divest any asset in Hong Kong at the moment".
He expects Hong Kong assets to account for 70 to 75 per cent of its total portfolio value, mainland China assets at about 20 per cent and overseas assets at around 10 per cent.
With more than A$30 billion of commercial real estate transactions per year in the past five years and a pool of sophisticated real estate investors domestically and overseas, there were ample opportunities in Australia for growth, according to Link.
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In particular, Sydney is an established and growing global gateway city in Australia, with strong tenant demand, it said.
Blackstone put the building on the market in October, drawing bids from companies including JPMorgan Asset Management and Singapore's Keppel Reit.
Prime office rents in Sydney rose 5.5 per cent year on year in the third quarter, according to Cushman & Wakefield.
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The overall vacancy rate for Sydney's core business district stood at 3.7 per cent in the third quarter, down from 4.1 per cent at the end of the fourth quarter in 2018, it said.
"Premium grade stock has the tightest vacancy rate among all grades at just 2.7 per cent," according to Cushman & Wakefield.
Last month, Link Reit, which owns a portfolio of retail facilities, car parks and offices across Hong Kong, posted an 8.5 per cent jump in net profit for the third quarter to HK$4.07 billion (US$519.6 million), while revenue rose 7.8 per cent to HK$5.3 billion.
The company declared an 8.3 per cent increase in interim dividend to HK$1.4147 per share. It also owns 5 million square feet of retail and office space in Beijing, Shanghai, Guangzhou and Shenzhen.
"Having made Link stronger and resilient, the focus of the next phase is to make Link a better organisation. We will continue to seek opportunities to grow, whether in our core markets in Hong Kong and four first-tier cities in mainland China, or other markets which we will opportunistically explore," Hongchoy said in a statement accompanying the interim results.
Link Reit shares closed unchanged at HK$78.9 on Thursday.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
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