Asia’s largest real estate trust to buy back units to maintain dividend payout to investors

The Link Real Estate Investment Trust, Asia’s largest operator of such income-producing companies, has announced a buy-back of its units for the second year, as it invests some of the income earned from property sales to maintain its distribution to investors.

Link Reit, as it’s also called, will buy up to 80 million units from the market, according to a filing to the Hong Kong stock exchange. Based on Wednesday’s closing price of HK$72.40 per share, the buy-back will cost HK$5.79 billion (US$743 million).

Buy-backs reduce the pool of shares, or units, available in the market, which bolsters the earnings per share, thereby attracting more investors. That would be the second buy-back in as many years by the company, which owns 61,000 car parking spaces and 109 retail properties mostly near Hong Kong’s public housing estates. It sold 17 properties last November for HK$23 billion.

Link Reit spent HK$4.35 billion to buy back 64.5 million units at an average price of HK$67.43 in the financial year ended March.

“The sale of properties had led to a drop in distributable income by 8 per cent,” said Raymond Cheng, a director of CGS-CIMB Securities. “To offset the negative effect on dividend per unit, Link would undergo share buy-backs every time after it sells assets to reduce the number of shares.”