Link Reit falls 12.8% after rights issue triggers dividend qualms
LINK Reit, one of Asia’s largest real estate investment trusts, saw shares tumble on Monday (Feb 13) following its plan to conduct a US$2.5 billion rights offering.
Link’s shares fell 12.8 per cent to HK$54.75 in Hong Kong, the most since 2008.
The company will issue as many as 437.7 million shares at HK$44.2 (S$7.50) apiece on the basis of one for every five existing shares, it announced on Friday.
It will use the proceeds for repaying debts and pursuing investment opportunities. Link expects net gearing ratio to decrease to below 20 per cent with the move.
Link Reit’s proposed rights issue could dilute its dividend per unit for the fiscal year ending March 2024 by about 14 per cent, according to Bloomberg Intelligence analysts Patrick Wong and Yan Chi Wong.
Goldman Sachs Group analyst Simon Cheung on Monday downgraded Link Reit to neutral from buy with a price target of HK$68.90.
Other Hong Kong developers including New World Development and Henderson Land Development also saw shares fall. The former dropped by as much as 9.6 per cent.
With the new capital, Link Reit aims to diversify further with a focus on Asia-Pacific, including Singapore and Sydney, a company executive said in a media call on Friday.
Link has properties including shopping centres and office buildings in Hong Kong, mainland China, Singapore, Melbourne, Sydney and London. It invests in shopping centres, offices and logistics facilities. BLOOMBERG
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