HONG KONG: The Link Real Estate Investment Trust, or Link REIT, announced yesterday that its total distributable income for the first half rose 19.3 percent to HK$1.06 billion, as the company's asset enhancement program boosted the average base rent and occupancy rate at its malls.

Link REIT, which manages public housing shopping centers in Hong Kong, saw its distribution per share for the six months ended September 30 surge 18.3 percent to HK48.35 cents, up from HK40.86 cents a year earlier.

Executive director and chief executive officer Ian Robins said the asset enhancement program will become a more important revenue driver for the Link in the near term.

"The management is focused on improving the quality of retail centers for the benefit of tenants and the community," Robins told reporters yesterday.

Occupancy rate of the Link's malls has increased to 90.6 percent from 87.6 percent a year earlier, although retention rate has dropped to 69.5 percent from 76.3 percent.

Robins said the asset enhancement works, such as renovations, which can create temporary inconveniences, disruptions, noise, etc., have whittled down the retention rate, but believes the figure is still acceptable.

"The fact is that the occupancy ratio is increasing and there is a demand among retailers looking to come into the centers," he added.

Last Thursday, around 3,000 retailers, including 200 doctors, from more than 30 public housing estates protested against the latest rental increase at the Link's malls. The Hong Kong Doctors' Union earlier said the Link has increased their clinic rents by 100 per cent.

Responding to the protests, Robins said the company will continue to communicate with the medical association, while it is also keen to improve the medical quality in its shopping centers.

"We don't believe any adjustment (on the rents) is appropriate," he said, adding that the Link's average rent still remains well below the market level.

Yesterday, the Link also announced that average monthly base rent per square foot rose 10.8 percent to HK$29.7 from HK$26.8 year on year, as the company increased its rents at shopping centers where asset enhancement work has been completed.

For the six-month period, the Link has finished three asset enhancement projects, with a total spending of HK$217 million. The projects have delivered return rates ranging from 16.8 percent to 25.2 percent.

The company expects to complete four more asset enhancement projects in the rest of the fiscal year worth HK$545 million. An additional capital expenditure of HK$2.68 billion will be invested in asset enhancement works at some point in the foreseeable future.

Shares of the Link rebounded in yesterday's afternoon trading session, after the announcement of its first-half result. The stock ended trading at HK$17.56, advancing 3.78 percent or HK$0.64.

(HK Edition 11/20/2009 page3)