FY2023/24 Pre-Blackout Briefing
27 March 2024
Agenda
Key Themes Shaping the Macro Environment Navigating the headwinds
4
Key Operating Market Prospects
Stable economic outlook but risks to weigh on sentiment
Stable economic outlook - low inflation provides room for fiscal and monetary stimulus to provide support the economy
2023 GDP growth rate at 5.2%, but
economy is expected to slow amidst
macro headwinds
Risks to growth -
slower than expected recovery
2024 GDP growth of c. 2% expected to be led by manufacturing and services
Fiscal support in Budget 2024 to address near-term concerns and fund longer term productivity
Risks to growth - macro headwinds and geopolitical uncertainties, elevated interest rates and sticky inflation
Peaking inflationary pressures but risk of subdued GDP growth remains
Encouraging retail leasing spreads; office to remain under pressure but could alleviate in Sydney due to lack of new supply in 2025 and 2026
Risks of cap rate expansion remain with office at most risk and retail the least
Strategic Focus Areas for Driving Performance Deploying a holistic approach
Achieving Operational Excellence
Ensuring consistently high occupancy rate Adjusting trade mix to reflect evolving market trends
Sharpening Portfolio Management Focusing on yield accretive deals Asset recycling for better capital utilisation
Entrenching Balance Sheet Strength Holistic approach that maximises financial resilience Increasing long term value for unitholders by conducting unit buyback
Link 3.0 Pathway
Diversification strategy to mitigate risk inherent in a single area
Queen Victoria
Building
Strengthened bench strength to drive long term and sustainable growth
Hong Kong Retail
Operational excellence anchored by high occupancy
Hong Kong Retail
T Town
Notes:
(1) All figures for the period ended or as at 31 December 2023.
(2) Average monthly unit rent represents the average base rent (excluding management fee) per month psf of leased area.
(3) On IFA basis.
(4) Percentage figures represent year-on-year change in tenants' average monthly sales per square foot of the period for April 2023 to December 2023.
(5) A ratio of effective rent (excluding management fee) to tenant retail gross sales.
Cross-border Spending Outflow Trend Expected to persist for the short-to-medium term
Current Market Trend
Hongkongers heading North and spending across the border reflect deeper integration with Mainland China
Hong Kong shoppers are gravitating towards entertainment and dining experiences
Impact on Link
Notes:
(1) A ratio of base rent (excluding management fees) to tenant retail gross sales psf.
FOR THE PERIOD APR 2023 - DEC 2023
TENANT SALES
GROWTH(1, 3)
Food and beverage 5.9%
Supermarket & foodstuff -6.0%
General retail (2) 3.3%
OVERALL 1.3%
(2) Including clothing, department store, electrical and household products, personal care/medicine, optical, books and stationery, newspaper, valuable goods, services, leisure and entertainment, and other retail.
(3) Percentage figures represent year-on-year change in tenants' average monthly sales psf.
(4) All figures for the period ended or as at 31 December 2023.
Fortifying Resilience While Navigating Toward Growth Optimising operations and reinforcing resilience
10
Boosting Efficiency
Diminished government support post-pandemic, while utility costs have levelled. Commitment to enhancing operational efficiency to counter cost inflation
Tenant Remixing
Innovate with unique F&B concepts, diversified experiences and services and downsize supermarket trades
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Disclaimer
The Link Real Estate Investment Trust published this content on 27 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 March 2024 08:08:02 UTC.