HONG KONG: The Link Management Ltd, manager of The Link Real Estate Investment Trust (The Link REIT), recorded double-digit growth in net property income and distributable income last year thanks to higher rent and effective cost control.

The strong operating results came despite the local economy slipping into recession in the third quarter of 2008.

"The year's results add to our three-year track record of consistent growth in revenue, net property income and distribution per unit, and reflect the resiliency of our portfolio to economic adjustment, and our efforts to realize its potential," chairman Nicholas Sallnow-Smith told reporters after the company's result announcement yesterday.

The Link REIT's property portfolio consists mainly of retail properties. It also owns the largest car park portfolio in the city.

For the whole year, net property income rose 10.6 percent to HK$2.8 billion from HK$2.5 billion in 2008 due mainly to higher average rent and effective cost control.

For the period, the average monthly base rent increased 11.6 percent to HK$30.90 per square foot from HK$27.70 in the previous year while the expense-to-income ratio declined to 37.7 percent from 39.6 percent.

Total distributable income rose 13.5 percent to HK$1.8 billion from HK$1.6 billion a year ago, while distribution per unit increased by 12.9 percent year-on-year to 83.99 cents.

Revenue grew 7.2 percent to HK$4.5 billion from HK$4.2 billion in the previous year.

The company attributed the increase in average monthly base rent to strong retail rental reversions due to its resilient property portfolio, which focuses on staples and daily consumer needs.

Composite rental reversion rate rose to 25.2 percent from 22.5 percent a year ago.

It also cited contributions from completed asset enhancement projects, noting that five asset enhancement projects worth HK$222 million were completed during the year.

Looking ahead, The Link Management Ltd says it will continue to upgrade its retail portfolio to attract more shoppers.

It plans to invest a total of HK$2.6 billion to upgrade 22 projects in the next few years, with seven asset enhancement projects worth HK$533 million to be completed by March next year, the end of the current financial year.

Sallnow-Smith also told reporters that the company is financially well positioned to expand its property portfolio.

"Acquisition is not an immediate priority, but with our solid financial fundamentals and experienced management team, we will be ready when opportunities arise," he said.

The company also plans to step up efforts in cost control. It is currently reviewing third-party property management agreements for all its shopping center and car park properties. It expects to realize cost savings in the process.

(HK Edition 06/18/2009 page4)