CLSA has issued a research report adjusting its price target for LINK REIT (00823) downward by 1.4% to HK$48.5 from HK$49.2, while reiterating an "Outperform" rating, considering the company remains a preferred choice.

The revision reflects a reduction in the distribution per unit (DPU) and an increase in the required dividend yield due to rising U.S. Treasury rates.

LINK REIT's performance for the fiscal year ending March 31, 2026, was largely in line with expectations, with the slight decline in DPU primarily attributed to persistently challenging rental market trends in both Hong Kong and mainland China.

Management has identified 5-10% of the portfolio as non-core assets, indicating these may be gradually divested.

Furthermore, management has committed to using the net proceeds from the sale of Thomson Plaza, after expenses, for unit buybacks.

The firm believes that reallocating capital towards unit repurchases will help enhance DPU and shareholder returns.