Citigroup has issued a research report concerning LINK REIT (00823). The report notes the company's announcement to sell a 50% stake in the 100 Market Street building in Sydney to the Australian pension fund Aware Super for a total of A$225.9 million (approximately HK$1.24 billion). This price accurately reflects 50% of the property's valuation of A$451.75 million as of May 2026, which is also its book value as of March 2026. The transaction remains subject to anti-monopoly approval, expected within six to nine months, after which LINK REIT will continue to provide management services. The firm has reiterated its "Buy" rating with a target price of HK$44.8.

The analysis suggests this partial sale, in terms of transaction structure and pricing, fell slightly short of investor expectations, as the market had anticipated a moderate premium. The valuation of A$451.75 million represents a decline of approximately 34% from the original acquisition price of A$683 million in December 2019, reflecting a market revaluation and a reset cap rate to 6.5%. Nevertheless, given the impact of rising Australian interest rates on buyer sentiment, a sale at book value is viewed as reasonable and pragmatic. It aids in reducing exposure to non-core assets and strengthens capital recycling and portfolio restructuring. The proceeds from the sale could be used for share buybacks or reinvested into core retail assets in the Asia-Pacific region, potentially enhancing the upside of the existing HK$1.5 billion buyback program.

Citigroup points out that considering LINK REIT's ongoing efforts in capital recycling, share repurchase execution, stable current retail rents in Hong Kong alongside tenant sales, and the appointment of a new Chief Executive Officer, the company believes LINK REIT offers an attractive total shareholder return (approximately 7.7%), with fundamentals having bottomed out.