The management of the Link Real Estate Investment Trust (00823.HK) is keeping the profit and returns distribution levels to shareholders unchanged despite a HK$10 billion office construction plan.
The REIT will fund the project with loans, and the interest expense incurred will be capitalized as part of the cost, the Hong Kong Economic Journal reported, citing Link REIT’s chief executive George Hongchoy Kwok-Lung.
The company, in partnership with the Nan Fung Group, had snapped up a commercial site in Kwun Tong for HK$5.86 billion, a move that may have pushed the REIT’s debt ratio up five percentage points to about 16 percent.
Total investment on the project is expected to top HK$10 billion, accounting for 4.9 percent of the REIT’s total assets and leaving room for another 5.1 percent worth of investment property under the current limit.
Analysts said the impact of the new initiative on debt levels will be low and that it will be a positive for the long term.
Translation by Vey Wong
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