Afternoon, ladies and gentlemen. Welcome to Link REIT's 2025 and 2026 nine-month operational update. This is Christy Lam, Director of Investor Relations. Today we have Group CFO, Mr. Kok Siong Ng, Group CIO, Mr. John Saunders, Group Managing Director, Asset Management, Mr. Emmanuel Farcis. On the screen, you may find today's agenda. Now, let me hand the floor over to K.S.
Thanks, Christy, and good afternoon, everyone. On the geopolitical front, recent tensions in Iran have driven a surge in energy price, creating renewed inflationary pressures with the potential for this to feed through stagflation or recessionary scenarios. Global growth outlook remains divergent across markets, while most major central banks are currently maintaining a hold stance on interest rates. Although the trajectory of geopolitical developments remains uncertain, we are closely monitoring the situation and assessing its impact on the company. Our business, focusing predominantly on non-discretionary retail, continues to exhibit relative resilience, supported by stable underlying consumer demand as we continue to improve on our tenant mix, and our gearing level remains low and our liabilities remain manageable.
On operations, occupancy has remained at healthy levels despite a challenging retail backdrop in Hong Kong and China mainland , with Hong Kong rental reversions standing at - 7.5% for the ninth month and expected to stay in the high negative single-digit range for the full year. In contrast, operating conditions in Singapore and Australia remain robust, with assets close to full occupancy. From a capital perspective, we completed pre-financing of around HKD 15 billion of FY 2025/2026 debt at competitive rates and remain focused on cost and efficiency to protect margins. Next FY, we have only HKD 12 billion of refinancing needs. Finally, on focus areas. We continue to work on our core assets of malls and car parks to deliver sustainable returns, advance asset recycling opportunities on non-core and mature assets, and plan to return excess capital where appropriate. With that, I'll hand over to John for the portfolio review.
Thanks, K.S. As of September 2025, the valuation of the Link REIT portfolio stood at HKD 223 billion. That's down about 1.3% from six months ago. Core Retail and Car Park assets continue to form the backbone of the portfolio, accounting for just over 90% of the total, with the remaining 9.6% comprising other assets. Geographically, Hong Kong and the Chinese mainland remain the key markets, representing around 88% of portfolio value. While international assets, primarily in Australia and Singapore, make up the balance. As market conditions evolve, valuation adjustments are expected to reflect negative rental reversions. Next, Emmanuel will go through our operational performance.
Thank you, John. Turning to our retail assets, here is a snapshot of performance across the portfolio. Overall, while near-term conditions remain mixed, our proactive asset management efforts continue to strengthen portfolio fundamentals, enhance resilience against market volatility, and position us to benefit from recovery over time. In Hong Kong, retail conditions remain challenging, but selected trades have shown early signs of recovery. We are further embracing the e-commerce trend through piloting new pickup services and seeking to ensure the continued attractiveness of our assets through trade mix optimization, asset enhancement, and targeted leasing, particularly from Chinese mainland tenants. On the Chinese mainland front, sales momentum has improved across selected categories. Tenant remixing, refreshed layouts, and new concepts remain a key part of our leasing strategy.
As for the international business, Singapore and Australia continue to deliver steady performance underpinned by high occupancy, positive double-digit rental reversions, and constructive leasing outcomes. In a nutshell, the continued relevance of our assets across markets is anchored by proactive asset management and resilient fundamentals. In Hong Kong, leasing conditions have remained resilient, with occupancy sustained at a high level, also rental reversions continue to sit in the high negative single-digit range. Against this backdrop, tenant sales and occupancy costs have shown early signs of stabilization. We remain well aware of the structural shift driven by cross-border e-commerce. In response, and as mentioned in the prior slide, we are piloting a new pickup service, starting with a small number of self-operated pickup points. This initiative is designed to reinforce footfall, enhance last-mile relevance, and deepen community engagement while engaging shopper circulation across the wider mall system.
Moving on to Car Parks. We continue to further optimize the revenue model to strengthen the resilience of our earnings from the segment. Dynamic pricing continue to provide support, while adjustments to utilization and pricing structures are aimed at enhancing income sustainability. Looking at the other assets, overall occupancy remained largely sound, with Hong Kong Office near full occupancy, while Chinese Mainland Offices and logistic remain healthy. In Hong Kong Offices, market sentiment has shown some improvement, supported by demand from the banking and finance sectors, with vacancy pressure in Kowloon East easing. Chinese Mainland Offices continue to demonstrate resilient take-up following asset upgrades, although leasing terms remain under pressure amid elevated supply. Chinese Mainland Logistic remain well leased amid heightened competition, with demand supported by domestic e-commerce growth and third-party logistics providers.
Finally, with the international office portfolio, leasing traction has improved, with core assets showing greater resilience amid an ongoing flight quality trend. I will now hand to K.S. to walk through capital management and cost optimization.
Thanks, Emmanuel. On capital management, Link is well-positioned amid the challenging macro outlook, thanks to its strong financial position underpinned by a healthy balance sheet, as reflected in the key metrics shown. Strong access to capital markets is supported by disciplined capital management, effective interest cost control, and a high hedge ratio, providing earning stability amid market volatility. Funding sources remain well-diversified, spanning bonds, bank facilities, and convertible instruments, with well-established banking relationship across the Asia-Pac region. Key credit metrics reflect a strong and healthy position with conservative gearing and low funding costs. Active refinancing execution during FY 2025/2026 secured funding across multiple tenors at competitive rates, extending that maturity and optimizing the funding profile. Refinancing execution has also been proactive, with HKD 15 billion refinanced as at February 2026, leaving only HKD 12 billion for the coming financial year.
These slides outline the progress of our cost optimization efforts, with an emphasis on strengthening the operating platform in a sustainable way rather than delivering one-off savings. At the organizational level, we have adjusted the management structure to better align with our strategic priorities and the external environment. By reducing layer and strengthening our mid-level management, we have improved agility and decision-making while maintaining appropriate oversight. Taken together, these actions underpin annualized savings that are now expected to exceed our previously communicated HKD 200 million target from the next financial year onwards. In parallel, we are improving efficiency across daily operations. Increased use of technology and automation is helping to enhance productivity and consistency, while the consolidation of facilities management arrangements supports cost control amid ongoing inflationary pressures and regulated wage increases.
Overall, these initiatives contribute to a leaner and more resilient operating model, providing capacity to support stable and sustainable returns over time for our unitholders. I'll now hand over to John to walk through our focus areas. Thank you.
Turning to our focus areas, our priority is to sustain unitholder value delivered through harnessing our core strength in retail malls, selected capital recycling, and cost discipline. We continue to leverage our core capabilities by actively managing and optimizing our Retail and Car Park assets across Asia Pacific, with a clear focus on protecting occupancy and reinforcing portfolio fundamentals. Beyond day-to-day management, we're also introducing targeted initiatives to address structural retail challenges, such as rolling out our collection point initiative to respond to community needs and improve footfall, and refining our car park revenue strategy as part of a broader approach to asset optimization. Secondly, we will continue to advance capital recycling focus on non-core assets, including selected office exposures, whilst maintaining flexibility around timing and potential returns of excess capital. Thirdly, cost optimization remains a key management focus.
Meaningful actions have been taken to mitigate business pressures with enhanced operating efficiency, including the consolidation of our integrated facilities management arrangements, which is delivering tangible savings and supporting margin resilience. As K.S. mentioned earlier, we have also simplified and streamlined the executive structure, enabling the organization to operate more effectively while continuing to generate cost savings. Lastly, against the backdrop of ongoing geopolitical uncertainty, we continue to closely monitor developments and maintain a prudent, measured approach to both cost management and portfolio positioning. While market conditions remain challenging, our focus on non-discretionary retail continues to provide a degree of resilience to the business. With that, we thank you all for your time and participation today.
Now let's start. For the first questions, we have three questions from Karl from JPMorgan. First question, can you comment on the tenant sales trend so far year-to-date? Has this improved versus the last quarter? In particular year-to-date, have our tenant sales outperformed in line or underperformed the Hong Kong overall average? And there is another question. What is your latest guidance on rental reversion for the next six months or so? Do you expect the negative rental reversion to be similar or there may be improvements? Thank you.
I will take that one.
Sure.
On the-
Yeah.
Yeah. I suppose I will take that one. On the sales, I think, generally speaking, our sales do not perfectly correlate with the market. But what we have been seeing is a slight improvement on some of our core categories. The market, as you know, has been driven by sales on luxury goods, electronics, and where we do have these categories in our larger malls, these have been performing very well. On our core categories of F&Bs and supermarkets, we have been seeing some improvement compared to last year. That is an overall trend of gradual improvement that we have been seeing, but we are still cautiously optimistic about this. What it means is that basically our tenants have been working on improving their sales through promotions, through pricing, through regearing their supply chains. And we do see some of that starting to pay off.
Thank you.
Thank you.
Next we have questions from Cindy. The first question from Cindy is also about tenant sales and reversion. I believe Emmanuel has just addressed it already. The second question, how would management interpret the escalated decline in supermarket? Any plan to downsize or repurpose some supermarket area? Then, maybe we have Emmanuel to address this question.
Yeah
before we go to the next.
I think on the supermarkets, what we are seeing is really the supermarket operators have been investing again into their pricing, into their shop presentation, the stock presentation, reducing the price differential between Hong Kong and the Mainland, investing in promotion. And when we look at the performance of supermarkets in our portfolio, we do see slight improvements year-on-year. Every quarter has been seeing some better sales. At the moment, we don't see any consolidation from our supermarkets. We do work on some aspects on their online sales as well. While the physical footprint might be the same, the SKUs that might be delivered at a given supermarket through online is expected to increase. That generate more sales through the same footprint.
We continue to see supermarket as a very important element of our trade mix and the proximity that it provides, and how it serves the community living abroad. One thing, going back also to the question on reversion, I think when we look at the outlook, we do expect reversion to remain negative at around the same level as the one we had for FY 2025, FY 2026. And that is really because of, we are continuing to see the wash through the business cycle that started about three years ago, and that was reflected in higher rents and based on the optimism about the recovery from COVID and the reopening of the market in Hong Kong.
Thank you. Next one still from Cindy. How's the management thoughts on buyback? Given your current valuation, buying back your own shares seem to be more attractive than most investments outside. And the fourth question is, may we have an update on fund management business? November, we mentioned initial $ 1 billion raised. When do you target to officially launch the fund? And does it hinge on acquisition pace in Australia?
Yeah. Let me take that. Look, at any time, we always maintain portfolio discipline. I would say the bottom 5% of what we own is always being assessed for potential disposal and recycling. Some of you will have seen, because it's in the public domain, that we're involved in the sale of an office asset in Australia. At the moment, 100 Market Street, and we should be able to bring you more news of that going forward. I think that portfolio discipline is important. When it comes to looking at purchases, yeah, you're absolutely right. We're trading at a little more than a 7% yield at the moment. Therefore, what was already a high bar to purchase becomes even more telling, I think, when you're trading at that level of yield.
The answer is yes, where we have excess capital, we would, as we said, expect to be recycling that excess capital back to shareholders. In terms of the third-party side, we've talked about the $1 billion that we have under management at the moment. That does actually include the fund. I would say roughly two-thirds of it's in separate accounts, and the rest is in the fund. It's not contingent on any specific Australian asset per se. We're committed to the journey. I think it's fair to say that with all the Middle East political uncertainty that's ongoing at the moment, that it's quite hard work raising capital. But we are at a $1 billion spread between the separate accounts and the fund business.
Thank you. We have questions from Gorman Simon. You talked about signs of stabilization in retail sales and rent. When exactly have you observed? Also, he asked about if there is any update regarding the Link 3.0 strategy and fund management business.
I think when you look at gross sales in Hong Kong, the past eight or nine months were showing positive signs. Again, for us, there is a slight disconnection between the sales in the overall market that have been mostly driven by electronics, valuable goods. Again, when we have these categories in our mall, they've been performing quite well, but they are small proportion. When we look at certain categories along some of the F&B, along supermarkets, we've been noticing that for the past two, three quarters. This is still a little bit patchy. What we are doing is basically focusing on the management of the portfolio in terms of maintaining very strong discipline in terms of cost and efficiency, supporting our tenants as much as possible.
We are piloting new initiatives in terms of e-commerce and embracing e-commerce with the launch of a new initiative called Link Collect, where we will be running our own pickup points. The idea with this is really to ensure that we consolidate, solidify our role in the community, bring in footfall, and bring ancillary sales. So whenever somebody is coming to our pickup point, which we want to be of the highest quality in the neighborhood, they will also spend on the nearby shops. We are also looking at the Car Park income on that front. So we are doing everything we can in our power to really focus on the performance of the portfolio while retail sales improve gradually. Again, faced with this uncertainty, we control what we can control. So that's the gist of it.
Okay. So, for the next questions, just now regarding the Link 3.0, I think John already addressed on the update on the fund management business. Next, we also have K.S. asking about the progress of fund management, which we addressed. Karl Choi asking about, are there any criteria for returning capital to shareholders? For example, 30% of proceeds. Would Link only sell assets at book or above book value?
Yeah, look, I think as I said, the book or above book, I think the real focus is whether it's core and whether the asset's fully mature. I think we'll always try and maximize the price that we can get in the market, of course, but then we also need to have thought and look as to what the future outlook is of the asset as well. I think in terms of recycling capital back to shareholders, I think we have to look at it on a case-by-case basis. We have to be cognizant also that we are a dividend stock. But we are, I think it's fair to say, very committed to recycling the areas of the balance sheet that we don't see as core and that we've assessed for potential disposals, if that answers the question, I hope.
Thank you. Then we have a question from Mark, UBS. This time you separate Retail and Car Park from other assets. Should we expect we want to sell the offices and logistics on hand first? On the Car Park, should we expect a full year decline in revenue? How do we see the retail occupancy for Hong Kong as of today?
Shall I start with the two, the second question?
The Car Park and the Retail.
Yeah, the Car Park. On the Car Park, a few things. One thing is we have been launching this year a number of new products. For instance, the One-Link Pass where monthly parkers, if they top up certain amount, can have access to a number of car parks outside of their home car park, if you will. We have also been launching initiatives such as differentiated parking rates so that during peak season, and during festivals like Chinese New Year. This has been quite successful in terms of bringing additional revenue, and somehow that offsets the decline that we have seen last year in the number of parking tickets, which was an element of the economic situation and the fact that there were fewer cars on the road. Now we are continuing with this type of initiative.
We are looking at structuring our pricing differently in the coming future. At the same time, where we could be cautiously optimistic is the cost of ownership of a car has dropped significantly, because of the import of EV from China, and therefore we do see the number of cars registration stabilizing, not yet increasing again. What we are doing is against the market situation, is to come up with new products and new pricing structures that can counteract the drop in tickets. If we look at the occupancy in the portfolio, this is a key focus for us. We do see the occupancy staying at the same level of around 97%-ish type of band. This is very, very important because that maintains cash flow, that maintains activity.
As a result also of the dynamic releasing and reletting that we are doing when we are replacing tenants that are not performing, we are bringing in new tenants as quickly as possible. We are expanding the range of some of our key categories. For instance, bringing F&Bs from the mainland. We are keeping a very high retention rate. That is around 80%. Again, the occupancy, we do expect it to remain within the same levels.
Thank you. Just now also Mark asked about, will we expect to sell the office or logistics on hand first?
Yeah. Look, core for Link is being an Asian retail mall operator with car parks in Asia. I think office we have to look at as potentially non-core. I think any assets outside of Asia we have to look at as potentially non-core. We said before that the bulk of what we want to do is going to be an Asian mall and car park operator. That is the focus. Office, logistics, I think all of those we would deem as non-core. It does not mean they will necessarily all be transacted at the same time or in highly short order, but as I said to you, we are always looking at the 5% of the balance sheet that may need recycling or repurposing, and that is how we would categorize it.
Thank you. CLSA, Alvin also asked about the non-core disposal. I guess, I believe John already addressed on that. He also asked about if there is any new asset geography or category mixed targets for us. John, do you want to address that as well? Do we target any new regions or category?
No. I think we're focused predominantly on what we have. As I said to you before, when you're trading at a 7% yield, there's a very high bar for any asset that's going to outperform that, as it were. So I think for now we're happy with the geographical exposures that we have overlaid, as I mentioned to you, with the fact that, I'll reiterate again, core for us is retail and car parking. We're an Asian mall operator, and if we have excess capital, then we'll return and recycle that to shareholders as appropriate.
Thank you. We have another question from Mark. What is China retail rental reversions and the outlook?
Well, the outlook for China is if we look at Northern China, Beijing is still being challenged by two things. One thing is weak consumer demands and a number of competition. We also have in Northern China, rentals that were at elevated and unsustainable level, and so we are flushing this out. We will expect reversion to remain slightly, to remain negative, but in Northern China, to improve from where it was. That said, when we look at some of our malls in Northern China, some of the rebase is being done, but also the focus in terms of positioning and in terms of trade lease that has seen positive results in terms of footfall, in terms of sales.
Southern China is faring better overall with positive reversion, positive outcome on the back of some of the lease and on the back of some of the repositioning and change of tenants that we've been doing in the past 12 months.
Okay. Thank you. We got a few questions regarding the disposal. I believe we have already addressed it. We have these questions from Karl Choi. Do you have any update for the search for the CEO? Should we expect a new CEO will be onboarded? Maybe for these questions I will answer, because our management here is not involved in the search. We are still running the comprehensive search at the moment and seeking the proven candidate with international experience. Also will be a proven real estate investor and business manager for our listed company. It will take time and if there is any update then we will update very timely to you all. Meanwhile, we have this interim structure backed by the very strong team, which some of them you are seeing here.
We have our Group CFO and CIO to cover the Group CEO responsibilities at the moment, reporting to the Chair and the Board. The Chair has also agreed to commit more time in this point of time as the Independent Non-Executive Chair for Link under the new arrangement running from Jan 1st until the end of May 2027. I believe that at the moment we are still covered by the very strong team and we will update very soon. Next, let me see if there is any further questions. Okay, we got these questions from Goldman Sachs. To make sure I understand correctly, given your stock is trading at relatively undemanding valuation, is it hard for you to find value acquisition opportunities?
Yeah, as I said, when your own stock is trading at that sort of level, we always have a very high bar for acquisitions anyway. It has to be a strategic fit. Again, that for us is malls in Asia. In very simple terms, when you can buy your own stock at over 7%, that raises the bar even higher and then focuses one's mind in terms of excess capital recycling.
Okay. We have time for maybe one or two more questions. Let me see. We have one question regarding about the fund management. Why do you want to remain committed to the fund management business when global operating environment is so uncertain and private market going through some stress?
I think that's a fair question. I think in reality it's a very small cost for a significant amount of optionality, I think is the best way to describe it. We've achieved some success with the fund and with third-party capital. As I say, we're close to $1 billion, very close to $1 billion in total third-party capital AUM. We are committed to the journey. I think these capital raising environments, they ebb and flow. It certainly doesn't help what's going on in the Middle East in a general risk sense. Then again, having said that, some investors globally are more wary of investing into the U.S. and some of the benefits of that capital flow can be into Asia. It's a long journey. I won't describe it as anything else, but the cost is relatively small and is already baked into our numbers.
The optionality remains very significant, so we'll continue to push ahead with it.
Thank you. So, okay. Another question is from Karl Choi. How should we think about interest expense in the second half of 2026 versus the first half?
Thanks, Karl. I think if you just track our fixed rate at about two-thirds of our loan books and the fact that first half, clearly there was a nice high bond dip in March, April. Second half, we'll probably see financing costs increase slightly, but I don't think we are going to see it go a lot more beyond what we announced for the last set of results at 3.2%, largely because of that huge component of the fix. We have no incremental significant debt under management over the last six months.
Thanks. Another one, Australia. Any update for the Lendlease Australia modules?
Yeah. I do not think it is necessarily public information, but I think our involvement in that particular deal is unlikely. I refocus you back onto the question of high bars and recycling of capital.
Thank you. For the fund, there are some follow-up questions on the fund. Regarding the fund, how sticky are they? What is the expectation to prior the third parties for capital deployment?
Yeah. The answer is they are pretty sticky. The fund investors are stickier than the separate accounts, but both are sticky. If you have a separate account, then it is dependent on the desire for both parties, basically, to continue with the investment of that asset. With the fund, typically people are locked in from between seven and 10 years, and the deployment schedule is typically four years. Both sides of that equation are sticky, and the deployment schedule deliberately has a long runway to deal with bumps in the road like we are seeing in the Middle East at the moment, et cetera.
Thank you. Any more questions from the floor? If not, we will be looking forward to the upcoming final results in late May. Let me see. Okay, we got one more. Maybe we can address that as well. Thanks, Cindy. Since you have increased the priority of capital recycling, what makes you change your mind?
Yeah, I'm not sure it's a change of mind. Maybe I was doing a less effective job of communicating the desire previously. As I say, I'm very keen, the whole management team is very keen on having very strong portfolio discipline. We're always looking at what are our keepers and what are the ones that aren't performing so much. I think there is very much a priority. I think that is a correct assumption and statement. And we'll hopefully bring you some good news on that at a future time.
Thank you. With that, if there's no more questions, we've come to the end of this quarterly update, and we look forward to see you again in our final results. The date of the final results announcement will be told very soon. Thank you.
Thank you.
Thank you very much.