Hong Kong's Link REIT to sell HK$23b assets to Gaw Capital consortium

[HONG KONG] Hong Kong's Link Real Estate Investment Trust has agreed to sell some of its property assets to a consortium led by private-equity firm Gaw Capital Partners for HK$23 billion (S$4 billion), sending its shares to a record high.

Asia's largest REIT by market capitalisation owned assets in Hong Kong, Beijing, Shanghai and Guangzhou as of end-March. Its portfolio includes shopping centres, office buildings, car parks, wet markets and cooked food stalls.

Shares in Link REIT rose more than 3 per cent on Wednesday to touch an all-time high of HK$72.3, after the deal was announced late on Tuesday.

Under the agreement, Link REIT is selling a portfolio of 17 properties, which includes shopping malls and cars parks. The sale price represents a 52 per cent premium to the assets' market value at the end of September, the company said.

One of the world's most expensive real estate markets, Hong Kong has seen hectic dealmaking as mainly Chinese buyers scoop up assets amid growing demand for residential and commercial buildings.

Buyers of commercial real estate in Hong Kong are betting on a sustained recovery in the Asian financial hub's retail economy, helped by robust local consumption and a pick-up in tourist numbers.

Hong Kong-based Gaw Capital, a private-equity real-estate firm focused on Greater China and Asia, was among potential bidders shortlisted to buy the portfolio that was being divested by Link REIT, Reuters reported last month.

Link REIT said in July this year that it intended to conduct a strategic review of its portfolio and had appointed HSBC and UBS as financial advisers, and DTZ Cushman & Wakefield as real-estate adviser.

The company has made asset disposals and acquisitions over the past three years as part of an attempt to revamp its business model.

"The competitive bids and final sale price signify a vote of confidence in Hong Kong's economy and retail sector," George Hongchoy, CEO of Link Asset Management Ltd, the manager of Link REIT, said in a statement.

The company said the auction for the properties had attracted interest from international investors, including global and regional private-equity funds, sovereign-wealth funds, as well as local investors.

After the divestment, Link REIT will have about 90 per cent of its assets in Hong Kong and 10 per cent in China. The total portfolio value will be about HK$175 billion, it said in the statement.

REUTERS