Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Desperado: The bulk of the Link REIT (823.HK) [Link] franchise continues to contract: negative rental reversion rates persist in Hong Kong; declining tenant sales; and another round of negative property revaluation due to lower rents and/or higher cap rates. That being said, Link management also appears hellbent on destroying shareholder value with  deals that make little financial sense; and *Throwing Good Money After Bad Again: Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou for CNY 3.2 bn. According to management, current annualized NPI yield of 3.3% - barely covering the project’s cost of funding. Management would have investors believe that the opportunity for Link is the shopping mall’s 70% occupancy and that 68% of leases are expiring between now and 2023. In order to improve occupancy, it would appear that Link would likely need to offering significant tenant enticements, and investment massively in asset enhancement.

*Desperado: The bulk of the Link REIT (823.HK) [Link] franchise continues to contract: negative rental reversion rates persist in Hong Kong; declining tenant sales; and another round of negative property revaluation due to lower rents and/or higher cap rates. That being said, Link management also appears hellbent on destroying shareholder value with  deals that make little financial sense; and *Throwing Good Money After Bad Again: Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou for CNY 3.2 bn. According to management, current annualized NPI yield of 3.3% - barely covering the project’s cost of funding. Management would have investors believe that the opportunity for Link is the shopping mall’s 70% occupancy and that 68% of leases are expiring between now and 2023. In order to improve occupancy, it would appear that Link would likely need to offering significant tenant enticements, and investment massively in asset enhancement.

Link REIT

Link REIT – Purchase or Perish