Link REIT Enters Singapore Market; Increasing Fair Value Estimate to HKD 83

We raise our fair value estimate for Link REIT to HKD 83 per share from HKD 82 following the company’s acquisition of Jurong Point and Swing By at Thomson Plaza in Singapore for SGD 2.2 billion from Mercatus. Overall, we are positive on the transaction as we think that these are high-quality assets with good fundamentals. Jurong Point covers a population catchment of roughly 6% of Singapore’s population and is one of the 11 integrated transport hubs in Singapore, which we think could reinforce Link REIT’s efficient scale moat source. The deal is expected to be completed by the end of March 2023. We have added in the rental contribution from the two properties and fee income from managing AMK Hub from the fiscal year ending March 2024, partly offset by a slight increase in general and administrative costs, given absorption of around 140 employees from Mercatus, as well as a higher funding cost. We have raised our distribution forecast for fiscal 2024 to HKD 3.27 per unit from HKD 3.23.