Link REIT Issuer Summary

Report date: 2026-05-29

Issuer: Link Real Estate Investment Trust（領展房地産投資信託基金、Link REIT、HKEx: 0823）

Bond reference: The Link Finance (Cayman) 2009 Limited / LINK QDS (Singapore) Private Limited notes guaranteed through the Link REIT MTN structure

1. Business Snapshot and Recent Developments

Link Real Estate Investment Trust (“Link REIT” or “the REIT”) is a Hong Kong-listed real estate investment trust that owns and operates a portfolio centred on neighbourhood retail facilities and car parks in Hong Kong, together with investment properties in mainland China, Singapore, Australia and the UK. The starting point for credit analysis is that the REIT should not be analysed as a mainland Chinese residential developer. Its repayment sources are not proceeds from residential unit sales, but rental income, car park income, net property income, operating cash flow before distributions, and access to bank borrowing and the MTN market. At the same time, it should not be treated simply as a Hong Kong retail REIT. Although Hong Kong assets remain the core, it is an issuer combining assets in Singapore, Australia, mainland China and the UK, multi-currency borrowings, REIT distribution requirements, unit buy-backs and non-core asset disposals.

This update reflects the FY2025/26 full-year results announced on 28 May 2026, namely the annual results for the year ended 31 March 2026. In the previous 18 May 2026 version, the latest periodic disclosure was the FY2025/26 interim results, and the full-year results had not yet been incorporated. In the annual results, revenue was HK$13,938m, down 2.0% year on year; net property income was HK$10,230m, down 3.7%; amount available for distribution was HK$6,577m, down 6.4%; and full-year DPU was 253.61 Hong Kong cents, down 6.9%. NAV per unit was HK$57.75, down 8.8% from HK$63.30 a year earlier. The net gearing ratio was 23.9% and the gross gearing ratio was 25.6%, up from 21.5% and 23.1%, respectively, in the prior year.

These results do not fundamentally reverse Link REIT’s credit profile, but they clarify the direction that remained unconfirmed in the previous report. The strengths of high occupancy, substantial interest coverage, low gearing and A2/A/A ratings remain intact. At the same time, rental reversion rates for Hong Kong retail and mainland China retail remained materially negative for the full year, while NAV declined, DPU declined, the amount available for distribution fell and gearing increased at the same time. This is not an immediate liquidity issue. Rather, the results show that the credit cushion of a strong REIT is being gradually consumed by rental resetting and valuation declines.

The company’s strategic message is “back to basics”, meaning a return to the operating capabilities of its core retail facilities and car parks. The company highlighted restoring the competitiveness of its existing core portfolio, disposing of non-core assets, conducting unit buy-backs when surplus capital and unit price conditions are met, making selective investments in core retail facilities, and reducing staff costs and general and administrative expenses by more than HK$200m per year. In April 2026, the company announced an agreement to sell its property interest in Swing By @ Thomson Plaza in Singapore for S$250m, and the annual results release explained that it intends to use the disposal proceeds for unit buy-backs. However, beyond this disposal, it has not been confirmed that the priority order for other non-core disposal proceeds is fixed among debt reduction, investment in core assets, unit buy-backs and distributions.

For bond investors, this capital allocation has two sides. Non-core asset disposals can serve as a tool for asset rotation, liquidity preservation and gearing management. On the other hand, if disposal proceeds are directed more toward unit buy-backs or distribution support than debt reduction, they may support NAV or DPU but will not necessarily directly improve liquidity or leverage headroom for bondholders. Therefore, the future focus is not only whether assets can be sold. It is where the disposal proceeds go among debt reduction, reinvestment, unit buy-backs and distributions.

This report mainly uses the FY2025/26 annual results release, the HKEX annual results announcement, the annual results presentation, the company’s financial highlights, the company’s credit ratings page and existing MTN programme materials. The full FY2025/26 annual report, audited notes, facility-level lease expiry schedule, secured debt breakdown, top tenant concentration, asset-by-asset NPI, and detailed post-full-year-results rating agency reports had not been reviewed as of the date of this report. Accordingly, the credit view in the body of the report is updated based on the official results materials available, while items to be checked in the annual report are explicitly identified as unverified items.

2. Industry Position and Franchise Strength

Link REIT’s greatest business strength is its portfolio of retail facilities and car parks deeply embedded in Hong Kong neighbourhoods. Hong Kong has many retail facilities dependent on tourists, luxury consumption and flagship stores, but Link REIT’s core consists of retail facilities closer to food, daily necessities, F&B, education, healthcare, services and neighbourhood use. This feature does not fully immunise the REIT from economic downturns, but compared with a single luxury mall or office demand, it makes rental cash flow less prone to sudden collapse. The strength bond investors should focus on is not strong growth, but highly recurring rental and car park income.

Hong Kong retail indicators for FY2025/26 show both this strength and its constraints. Retail occupancy was high at 97.8%, and there was no sharp increase in vacancy. On the other hand, average monthly rent was HK$60.1 per square foot, and the annual rental reversion rate was negative 8.2%. Tenant sales fell 1.0% overall, with F&B up 1.2%, supermarkets and foodstuff down 0.5%, and general retail down 3.6%. The rent-to-sales ratio was 12.7%, which is not excessively high, but it is also not an environment of strong rental bargaining power. High occupancy is a credit support, while weak rental reversion will affect future NPI and valuations.

Weakness in Hong Kong retail reflects both structural changes in consumer behaviour and a cyclical retail environment. The company cited competition from mainland China e-commerce platforms, consumption outside Hong Kong and weakness in general retail. In response, it indicated a strategy of increasing F&B, education and hobbies, family entertainment, experience-based tenants that are difficult to replicate without physical stores, and pick-up and delivery services. This is a reasonable operating response, but from a credit perspective it is better read as a defensive measure to maintain occupancy and mitigate rental decline, rather than as evidence that growth investment will quickly restore rental growth.

The car park business is often underestimated within the REIT, but it is important from a credit perspective. Hong Kong car park-related revenue in FY2025/26 was broadly flat, down only 0.2% year on year. Hourly parking income increased 2.3%, while monthly parking income declined 1.0%. Monthly income per space was HK$3,388, and the average valuation per space was HK$705,000, up 4.0% year on year. Because car parks are less directly linked to consumer sentiment than retail tenant sales, they play a role in smoothing earnings. However, they are not risk-free assets, as they are affected by transport policy, car ownership trends, surrounding population, alternative transport and valuation yields.

The mainland China portfolio is a source of diversification, but it is also the area where current weakness is most visible. In FY2025/26, the mainland China portfolio recorded a 5.1% decline in revenue and a 5.8% decline in net property income in renminbi terms. In Hong Kong dollar terms, revenue and net property income declined 3.0% and 3.7%, respectively. Occupancy for mainland China retail was high at 96.6%, but the rental reversion rate was negative 14.3%. The company is introducing more than 174 new brands, repositioning retail facilities and undertaking small-scale renovations against a backdrop of intensifying competition and weak consumer sentiment. Here again, the issue is not vacancy, but rent levels and asset valuation.

The overseas portfolio provided support in the latest results. Overseas portfolio revenue was HK$1,867m, up 4.8%, and net property income was HK$1,236m, up 2.7%. Australian retail occupancy was 99.5%, with a positive rental reversion rate of 16.5%, and Singapore retail occupancy was 98.2%, with a positive rental reversion rate of 12.3%. This partially offsets weakness in Hong Kong and mainland China. However, overseas assets are affected by foreign exchange, local interest rates, taxation, acquisition prices, management distance and disposal markets. Diversification can be a credit positive, but it is not an unconditional improvement factor.

Partnerships with third-party capital and asset rotation should be viewed not as immediate credit improvements, but as capital policy options. If successful, they may improve capital efficiency, but they also increase the complexity of investment decisions, asset transactions and alignment of interests with external investors.

3. Portfolio and Segment Assessment

3.1 Portfolio Mix

At end-March 2026, the portfolio valuation was HK$216bn, down 2.9% over the half year from HK$223bn at end-September 2025. The main drivers of the decline were lower market rents in Hong Kong and mainland China, while Singapore and Australia were relatively resilient. By region, Hong Kong accounted for HK$159.0bn, mainland China for HK$29.6bn, Australia for HK$11.2bn, Singapore for HK$15.1bn and the UK for HK$1.6bn. Hong Kong remains the centre of the portfolio, and overseas diversification alone does not make the REIT detached from the Hong Kong cycle.

By asset type, retail and car park-related assets were HK$195bn and other assets were HK$21bn as of end-March 2026. The company regards 5-10% of the overall portfolio as non-core assets and is considering disposal potential. The important point is how non-core asset disposals are used for credit metrics. If disposal proceeds go to debt reduction, they are positive for gearing and liquidity. If they go to investment in core retail facilities, they may support future NPI. If they go to unit buy-backs, they may support DPU or unit value, but the debt reduction effect will be limited.

Looking at valuation yields, Hong Kong retail is 3.7-4.9%, Hong Kong car park-related assets are 3.1-5.0%, mainland China retail is 5.0-5.5%, Australian retail is 5.3-5.5%, Singapore retail is 4.1-4.5%, and UK office is 10.0%. Valuation yields are not company forecasts but are closer to inputs into appraised valuations, and they show that the REIT’s asset values are sensitive to interest rates, rents and transaction markets. In particular, if valuation yields rise while rental reversion remains negative in Hong Kong and mainland China, NAV and gearing would come under pressure at the same time.

3.2 Segment Operating Performance

Segment operations in FY2025/26 are split between weakness in Hong Kong and mainland China, strength in Australia and Singapore, and stability in car parks. Overall revenue and net property income declined, but occupancy remained high across many assets. Therefore, the REIT’s operating deterioration is not appearing as a sharp increase in vacancy, but as lower rent levels while maintaining high occupancy.

In Hong Kong retail, the REIT introduced 207 new brands, including 587 new leases and 380 existing brand renewals. Tenant retention is stated to be above 80%. The company is shifting the tenant mix toward learning and hobbies, F&B, family entertainment, food, and pick-up and delivery services. This operating effort is one of the REIT’s strengths. Even when rental reversion is negative, the REIT is trying to keep occupancy high, maintain footfall and preserve spending within its facilities. However, as long as rent levels are being reset, NPI and valuations will be pressured even at the same occupancy level.

Hong Kong car park-related assets again confirmed their earnings-smoothing role. Hourly parking income increased and almost offset weakness in monthly parking income. Because car parks are connected to Hong Kong residential areas, retail facilities and daily movement patterns, they tend to be more stable than general retail sales. At the same time, car park valuations are sensitive to interest rates and demand, and are also affected by policy changes and shifts in transport behaviour. Therefore, they should be recognised as a stable income source, while not overestimating their valuation support.

Mainland China retail has become clearer as a credit constraint. Occupancy of 96.6% is high, but negative rental reversion of 14.3% is substantial. The company is introducing lifestyle retail, IP-related retail and casual dining, and undertaking renovations at Link Plaza Tianhe and Link Plaza Tongzhou. These measures show some investment returns, but at the overall portfolio level, rent levels are declining. Mainland China assets account for about 14% of the total valuation, so they do not determine the entire credit profile on their own, but they affect NAV, investor sentiment, renminbi debt and rating agency views.

Australian and Singapore retail were clear offsetting factors in the latest results. Australian retail recorded positive rental reversion of 16.5%, and Singapore retail recorded positive rental reversion of 12.3%, with occupancy close to full. These metrics mitigate weakness in Hong Kong and mainland China. However, if strong overseas performance slows, the weakness in Hong Kong and mainland China would become more visible. In Singapore, the disposal of Swing By @ Thomson Plaza is underway, so post-disposal NPI, use of proceeds, and the contribution of the remaining Jurong Point asset need to be checked.

3.3 Asset Valuation, NAV and Capital Recycling

Investment property valuation is the second most important credit pillar in REIT credit after cash flow. At end-March 2026, the portfolio valuation was HK$216bn, down 2.9% from end-September 2025. Compared with end-March 2025, Hong Kong declined from HK$169.4bn to HK$159.0bn, and mainland China declined from HK$31.5bn to HK$29.6bn. Valuation decline does not involve cash outflow, but it directly affects gearing, NAV, capital market valuation and rating agency asset coverage.

NAV per unit was HK$57.75, down 8.8% from HK$63.30 a year earlier. It also declined further from HK$61.19 at end-September 2025, which was reviewed in the previous report. For equity investors, a decline in REIT NAV may appear to be an issue of unit price valuation, but it is also important for bond investors. When NAV declines, gearing rises even with the same debt amount, asset disposal headroom shrinks, and dilution concerns around equity raising intensify. If it becomes difficult to issue new equity when the unit price is significantly below NAV, refinancing and capital policy options also narrow.

The REIT’s valuation decline can be explained by the combination of weak rental reversion and valuation yields. As long as rental reversion rates for Hong Kong retail and mainland China retail remain negative, assumptions around future rental growth are likely to be cautious. In addition, if interest rates and property transaction yields remain high, valuation yields rise and pressure asset values. Company materials show valuation yields of 3.7-4.9% for Hong Kong retail, 3.1-5.0% for Hong Kong car park-related assets, and 5.0-5.5% for mainland China retail. UK office has a high yield of 10.0%; while small in scale, it is a signal of valuation pressure in overseas offices.

Capital recycling has become a more important theme in the latest results. The company regards 5-10% of the overall portfolio as non-core assets and has also announced the S$250m disposal of Swing By @ Thomson Plaza. The questions for bond investors are the disposal price and use of proceeds. Unit buy-backs may benefit per-unit metrics, but compared with debt reduction, their direct effect on liquidity and gearing is weaker. Disposal proceeds, cash on hand, near-term maturities, rating headroom and required investment in core assets need to be assessed together.

4. Financial Profile and Analysis

The FY2025/26 financial profile combines simultaneous declines in earnings, distributions and NAV with still-strong interest coverage and liquidity. Revenue and net property income declined year on year, but the simple NPI margin was 73.4%, and profitability after property operations remains high. The amount available for distribution and DPU declined. Based on the materials reviewed, the main items to be checked are the decline in revenue and net property income, operating costs, finance costs and distribution policy; detailed adjustments to the amount available for distribution remain unverified pending review of the annual report. The decline in investment property valuation should not be mixed into DPU decline, but should instead be analysed separately through its impact on NAV per unit, net gearing and capital market access.

The most important point in this table is that five-year growth in revenue and net property income coexists with declines in NAV and DPU. The operating portfolio is generating earnings, but asset valuation and the amount available for distribution are weak. In REIT credit, looking only at operating NPI makes the credit appear too strong, while looking only at NAV makes it appear too weak. Both need to be assessed together: whether rental cash flow supports interest payments and refinancing, and to what extent valuation decline is reducing gearing and capital market access.

Interest coverage remains strong. EBITDA interest coverage was 5.1x in FY2025/26, broadly in line with the 5.0x shown on the company’s ratings page as of March 2025. The average funding cost was 3.44%, improving from 3.58% in the prior year. This reflects the effect of high ratings, bank relationships, interest rate hedging and multi-currency funding. However, a lower average funding cost does not mean funding risk has disappeared. Future refinancing will be affected by credit spreads, FX hedging costs, currency-specific interest rates and banks’ lending appetite.

Gearing is comfortably low relative to the statutory limit. The gross gearing ratio was 25.6%, far below the 50% borrowing limit under the Hong Kong REIT Code. The net gearing ratio was also 23.9%, conservative compared with ordinary real estate companies. However, the headroom expected by the market for an A-rated REIT is well below the statutory limit. Bond investors should not read the credit as safe simply because it can borrow up to 50%. If asset valuations decline further, the amount available for distribution falls, and unit buy-backs or investment in core assets proceed at the same time, gearing could rise toward the high-20% range.

Distribution requirements complicate the reading of the financial profile. Under its Trust Deed, Link REIT must distribute at least 90% of its distributable income for each financial year. This is attractive for unitholders as a feature of the REIT structure, but it constrains retained cash flow for bond investors. The credit meaning differs depending on whether the REIT allows DPU to decline naturally in order to protect credit metrics, or uses asset disposals and unit buy-backs to support DPU. The latest DPU decline can be read as a natural adjustment rather than excessive distribution support, but because the company has also identified unit buy-backs as an option, future capital allocation needs to be tracked carefully.

Detailed rating agency adjusted metrics after the full-year results have not yet been reviewed. The company’s ratings page shows net debt / EBITDA of 4.9x, EBITDA interest coverage of 5.0x, net debt / investment properties of 22.4%, and net debt / (net debt + equity) of 24.1% as of March 2025. The FY2026 results presentation confirms EBITDA interest coverage of 5.1x and a net gearing ratio of 23.9% for the year ended March 2026. Rating agency-calculated net debt / EBITDA, secured debt ratio and unencumbered asset pool for the March 2026 year-end remain unverified.

5. Capital Structure, Liquidity and Funding

Link REIT’s capital structure and liquidity did not deteriorate materially in the latest results. Rather, available liquidity and average debt maturity improved. At end-March 2026, total debt was HK$56.7bn, consisting of HK$20.1bn of MTN, HK$3.3bn of convertible bonds and HK$33.3bn of bank borrowings. Bank borrowings accounted for about 59%, MTN about 35% and convertible bonds about 6%, indicating that the REIT uses both banks and the bond market.

Available liquidity of HK$12.2bn supports short-term liquidity. The breakdown is HK$8.4bn of unutilised committed facilities and HK$3.8bn of cash and bank deposits. Cash alone is not large compared with total debt, but including unutilised facilities it provides a buffer for near-term maturities. The near-term maturities that can be read from the maturity chart in the results presentation are as follows. These are approximate amounts from the chart, and the exact breakdown by bonds, bank borrowings and convertible bonds, individual series dates, and correspondence with committed facilities remain unverified.

Average debt maturity of 3.5 years improved from 2.8 years at end-March 2025. This is credit positive. At the previous interim stage, the average maturity of 2.9 years looked somewhat short, but full-year funding lengthened maturities to some extent. The fact that the REIT arranged HK$25.3bn of funding in FY2025/26 also demonstrates market access as an A-rated issuer. The breakdown was HK$19.0bn of bank loans, HK$1.6bn of private-placement MTN and HK$4.7bn of public bonds, showing access to both banks and the bond market.

On interest rates, the fixed-rate debt ratio of 60.0% is within the REIT’s stated management range of 50-70%. This provides resilience to rising interest rates, but 40% remains exposed to floating-rate or repricing risk. The decline in funding cost to 3.44% is positive, but future refinancing will be affected not only by market rates, but also by investor demand for Hong Kong and mainland China real estate credit, funding conditions in US dollars, Hong Kong dollars, renminbi, Singapore dollars and Australian dollars, and FX hedging costs.

By currency, post-swap debt is stated as HK$10.7bn in Hong Kong dollars, HK$25.2bn in renminbi, HK$7.3bn in Australian dollars, HK$13.5bn in Singapore dollars and less than HK$0.1bn in US dollars. Renminbi accounts for 44%, Singapore dollars for 24% and Australian dollars for 13%, which appears to correspond to asset locations to some extent. However, asset valuations, earnings and debt service are not fully naturally hedged. FX hedging contracts, flexibility of local cash flows, intragroup remittances and taxation should be checked in the annual report.

The MTN programme structure is also important. The August 2025 MTN offering circular shows a programme size of US$5bn, with The Link Finance (Cayman) 2009 Limited and LINK QDS (Singapore) Private Limited as issuers, guaranteed by Link REIT’s trustee and major subsidiaries. This report has not reviewed all individual issue terms, covenants, tax redemption provisions, change of control, cross default and negative pledge provisions for all outstanding series. Therefore, the assessment here is a general evaluation of issuer credit and the guaranteed MTN programme, not an investment recommendation on any individual bond.

6. Structural Considerations for Bondholders

When evaluating REIT bonds, it is necessary to distinguish among the issuer name, guarantors, trustee, asset ownership, the REIT Code and distribution requirements. Link REIT’s listed units represent the REIT itself, and assets are held through the trust structure. MTN issuance is conducted through Cayman or Singapore issuing vehicles, so bondholders’ credit risk depends not on the standalone issuing vehicle, but on Link REIT group’s guarantee structure and practical access to REIT assets.

The fact that the guaranteed MTN programme is rated in the same A category as Link REIT’s issuer rating indicates that rating agencies view the programme structure as close to Link REIT’s credit. However, the same rating does not remove the need to review issuer, guarantor, trustee liability limitations, negative pledge, tax redemption, change of control and cross default provisions.

The borrowing restriction under the REIT Code requires borrowings not to exceed 50% of gross asset value, and helps limit excessive leverage. The gross gearing ratio at end-March 2026 was 25.6%, leaving ample headroom to the regulatory limit. On the other hand, the REIT structure’s emphasis on distributions constrains internal retention. Under its Trust Deed, the REIT must distribute at least 90% of distributable income for each financial year, so investors should confirm that DPU support and unit buy-backs do not pressure gearing, liquidity or funding for core asset investment.

From an asset coverage perspective, the HK$216bn portfolio is an important support for unsecured bond investors. However, selling core Hong Kong retail and car park assets would also weaken the income base, so asset value should not be equated directly with liquidity. The annual report should be reviewed for secured debt, the unencumbered asset pool, asset-by-asset valuations and the post-disposal impact on NPI.

7. Rating Agency View

According to the company’s ratings page and the FY2025/26 results presentation, Link REIT’s corporate ratings are Moody’s A2/Stable, S&P A/Stable and Fitch A/Stable. The guaranteed MTN programme is also rated Moody’s A2, S&P A and Fitch A. This means the REIT is treated as an upper-tier investment-grade issuer within Asian real estate credit. The rating level reflects asset scale, recurring income from Hong Kong neighbourhood retail and car parks, low gearing, funding access and liquidity.

Fitch assigned Link REIT an inaugural A/Stable rating in March 2025, citing recurring income from well-located investment properties, non-discretionary tenants, high occupancy and prudent financial management. This is consistent with the basic view in this report. Link REIT’s strength lies not merely in the size of its assets, but in the recurrence of rental cash flow and the conservatism of its financial management. At the same time, the Stable outlook does not mean that negative rental reversion in Hong Kong and mainland China retail or the decline in NAV can be ignored.

S&P has announced an A long-term issue rating on proposed US dollar senior unsecured notes of The Link Finance (Cayman) 2009 Ltd. This shows that notes guaranteed by Link REIT are being assessed in line with the REIT’s credit profile. However, that announcement relates to proposed notes and is subject to final documentation. For individual bonds, final terms and post-issuance rating confirmation are necessary.

Detailed post-annual-results rating reports or downgrade triggers from Moody’s, S&P and Fitch have not yet been reviewed. It is important that the company materials reconfirm the A2/A/A ratings, but rating agencies’ adjusted debt/EBITDA, secured debt ratio, unencumbered asset ratio, stress assumptions for asset valuations and views on unit buy-backs remain unverified.

Ratings indicate average default risk and do not directly determine live bond spreads or relative value. Even for an A-rated REIT, individual bond prices can move with Hong Kong retail, mainland China commercial property, FX, asset valuations, maturities, unit buy-backs and broader spread markets. This report uses ratings as a supporting input for credit judgement, but does not treat the ratings themselves as a substitute for an investment decision.

8. Credit Positioning

Link REIT is positioned as an upper-tier defensive issuer within Hong Kong and Asian real estate credit. It has lower single-asset dependence than flagship mall-concentrated issuers, and greater recurrence from neighbourhood retail and car parks than premium office or mixed-use development issuers. At the same time, because it is a REIT, it differs from an ordinary listed property company in being affected by distribution requirements and unit market valuation. It is not a mainland Chinese residential developer, but because it owns mainland China commercial assets and renminbi debt, it is exposed to mainland China consumption, commercial real estate, FX and capital markets.

The main factors supporting the REIT’s A-rating level are low gearing, substantial interest coverage, diversified funding, official ratings, Hong Kong neighbourhood assets, car parks and asset value. The main constraints are negative rental reversion in Hong Kong and mainland China, NAV decline, investment property valuation sensitivity, distribution requirements, maturities in FY2026/27 and FY2027/28, and complexity associated with overseas asset expansion. Therefore, the REIT is a “strong, but not no-monitoring-required” credit.

This report does not assess relative value for individual bonds. An investment decision requires separate review of issuer credit together with each bond’s tenor, currency, issuer, guarantee, liquidity, spread level and comparison with similarly rated REIT names.

9. Key Credit Strengths and Constraints

Link REIT’s credit quality consists of a combination of durable supports and likewise persistent constraints. The supports are recurring income from Hong Kong neighbourhood retail and car parks, high occupancy, low gearing, A ratings, available liquidity and funding capacity across multiple markets. The constraints are rent resetting in Hong Kong and mainland China, NAV decline, distribution requirements, asset valuation sensitivity, capital policy including unit buy-backs, and near-term maturities.

The largest strength is the combination of low gearing and high occupancy. Even if asset values decline as a REIT, if NPI and liquidity do not immediately collapse, refinancing and interest payments remain easier to sustain. The largest constraint is that rental reversion and valuations are deteriorating in the same direction. When rents decline, NPI growth slows, valuations also decline and gearing rises. The gradual continuation of this path is Link REIT’s main downside.

10. Downside Scenarios and Monitoring Triggers

The most realistic downside scenario is not a sudden liquidity crisis, but a scenario in which gradual rental decline and valuation decline progress at the same time. If Hong Kong retail rental reversion remains negative in FY2026/27, weakness in mainland China retail persists, and the offset from Australia and Singapore weakens, NPI growth will weaken further. At the same time, if valuation yields rise or remain high, investment property valuations and NAV will decline. Operating cash flow may not collapse immediately, but gearing and rating headroom would narrow.

The second scenario is deterioration in the quality of capital market access. Average debt maturity has improved to 3.5 years, but FY2026/27 maturities are similar in size to available liquidity, and ongoing refinancing is required. If investor demand for Hong Kong and mainland China real estate credit declines, spreads widen even for A-rated issuers and banks become more cautious in lending, funding cost increases, DPU pressure and lower interest coverage would follow. However, at present, the REIT maintains its A ratings and arranged HK$25.3bn of funding in FY2025/26, so no immediate funding problem is visible.

The third scenario is a capital policy mismatch. Non-core asset disposals and unit buy-backs may look positive for unitholders. On the other hand, if disposal proceeds are prioritised for unit buy-backs rather than debt reduction, while investment in core assets is also required, the effect on lowering gearing will be limited. If rating headroom becomes thinner, the priority versus debt reduction needs to be confirmed.

The fourth scenario is that information on top tenants, facility-level NPI and lease maturities turns out to be more concentrated than assumed. Detailed tenant concentration, asset-by-asset NPI and facility-level cash flow are currently unverified. The diversification of neighbourhood retail can be understood conceptually, but if dependence on specific tenants, sectors or facilities is high, weaker rental bargaining power could flow through to NPI more quickly. This should be checked in the annual report.

There is also an upside scenario. If Hong Kong retail rental reversion bottoms, tenant sales stabilise, weakness in mainland China retail is limited to specific assets, and non-core disposal proceeds are used to manage gearing, the current A-rating range should be easier to maintain. The focus is whether the REIT can manage NPI, valuations, capital policy and refinancing at the same time.

11. Credit View and Monitoring Focus

Link REIT’s current credit quality is high, and it remains a strong issuer in the A-rating range. Low net gearing, high occupancy, substantial interest coverage, available liquidity, A2/A/A ratings, and access to banks and the MTN market support short-term debt repayment capacity. The direction of credit quality is not one of abrupt deterioration, but after the FY2025/26 results it is neutral to slightly downward, with the pace of change likely to be gradual as headroom is reduced over several quarters to several years. The probability of a rapid change in the level or direction of credit quality is currently low, but would rise if a sharp valuation decline, weaker capital market access, prioritisation of unit buy-backs and a rating outlook change were to occur together.

The latest results answer the monitoring item from the previous report: confirmation of the full-year results. Revenue and net property income declined, DPU and the amount available for distribution fell, and NAV declined further. Hong Kong retail occupancy is high, but rental reversion is negative 8.2%, while mainland China retail is negative 14.3%. This indicates that Link REIT’s issue is not a sharp vacancy increase, but a reset in rent levels and asset valuations. Therefore, the credit view should be updated to: short-term liquidity is strong, but medium-term headroom depends on rents and valuations.

The REIT’s supports are clear. At end-March 2026, the net gearing ratio was 23.9% and the gross gearing ratio was 25.6%, well below the 50% REIT Code limit. EBITDA interest coverage was 5.1x, the average funding cost was 3.44%, average debt maturity was 3.5 years, and available liquidity was HK$12.2bn. The fact that the REIT arranged HK$25.3bn of funding in FY2025/26 also demonstrates capital market access. Viewed only through these figures, short-term default risk is low.

At the same time, the constraints that bond investors should not ignore are also clear. DPU and the amount available for distribution declined, and NAV per unit has fallen continuously from FY2021/22 to FY2025/26. The REIT distribution requirement limits the ability to build substantial internal retention. Non-core asset disposals and unit buy-backs may be reasonable as capital policy, but if disposal proceeds are used for unit buy-backs rather than debt reduction, the direct benefit to bond investors will be limited. If asset valuations decline further, gearing will rise from the current low level.

The most important monitoring item going forward is, first, Hong Kong retail rental reversion in FY2026/27. The company has indicated the possibility that negative rental reversion in FY2026/27 may continue at broadly the same level as FY2025/26. Second is rental reversion and valuation of mainland China retail. Third is where non-core asset disposal proceeds go among debt reduction, core investment, unit buy-backs and distributions. Fourth is management of FY2026/27 and FY2027/28 maturities, and the refinancing terms for individual convertible bonds, MTNs and bank borrowings. Fifth is post-full-year-results rating agency commentary.

The basic conclusion for bond investors is that Link REIT is strong as an issuer credit, but not an issuer that can be left unmonitored because it is low risk. For a strong A-rated REIT, valuation decline, capital policy, unit buy-backs, distributions and refinancing terms affect spreads. As an issuer credit, it has enough strength to support continued holding, but investment decisions on individual LINREI bonds require separate analysis of tenor, currency, guarantee scope, individual issue terms, liquidity, market spread and comparison with similarly rated REITs and Hong Kong real estate credits.

12. Short Summary & Conclusion

Link REIT is one of Asia’s largest listed REITs, centred on Hong Kong neighbourhood retail and car parks, and is a strong investment-grade issuer supported by A2/A/A ratings, low gearing, substantial interest coverage and access to banks and the MTN market. In the FY2025/26 full-year results, revenue, net property income, amount available for distribution, DPU and NAV all declined, and negative rental reversion continued in Hong Kong and mainland China retail, creating slight downward pressure on the credit direction. Short-term liquidity risk is low, but investors should continue to monitor FY2026/27 rental reversion, use of proceeds from non-core asset disposals, unit buy-backs, refinancing of near-term maturities and rating agency commentary.

13. Unverified Items

The full FY2025/26 annual report had not been reviewed as of the date of this report. This update is based on the annual results release, HKEX annual results announcement, annual results presentation, the company’s financial highlights and the company’s credit ratings page. Audited notes, details of asset valuations, the cash flow statement, commitments, derivatives, interest rate hedging, FX exposure, related parties, secured debt and the unencumbered asset pool to be checked in the annual report remain unverified.

Detailed post-full-year-results rating reports from Moody’s, S&P and Fitch have not been obtained. The company’s ratings page and results presentation confirm A2/A/A ratings, all Stable, but detailed downgrade triggers, adjusted debt/EBITDA, adjusted EBITDA, secured debt ratio, unencumbered asset ratio and views on unit buy-backs by rating agency remain unverified.

Live prices, yields, OAS, peer comparisons, minimum trading denominations, liquidity, individual pricing supplements, call provisions, tax redemption, change of control, cross default and individual maturity walls for specific LINREI bonds were not reviewed in this report. Issuer credit and the investment attractiveness of individual bonds need to be analysed separately.

Detailed lease expiries, top tenant concentration, asset-by-asset NPI, facility-level cash flow, realised returns by renovation investment, overseas asset-level NOI, drivers of changes in facility-level valuations, full terms of unutilised committed facilities and restricted cash by entity remain unverified. This report uses confirmed occupancy, tenant sales, rent-to-sales ratio, rental reversion, NPI, valuations, gearing and liquidity for its assessment.

14. Sources

• Link REIT annual results news release, "Link Announces Annual Results, Back to Basics, and a Focus on Unitholders", 2026-05-28: https://www.linkreit.com/en/media/news-releases/link-announces-annual-results-back-to-basics-and-a-focus-on-unitholders
• HKEX final results announcement for the year ended 31 March 2026, 2026-05-28: https://www1.hkexnews.hk/listedco/listconews/sehk/2026/0528/2026052800355.pdf
• Link REIT Annual Results 2025/2026 analyst presentation, 2026-05-28: https://www.linkreit.com/-/media/linkreit/investor-relations/financial-reports-and-presentations/presentations/2025-2026/presentation/20260527_ar202526-annual-results-presentation.pdf
• Link REIT Financial Highlights: https://www.linkreit.com/en/investor-relations/financial-highlights/
• Link REIT Credit Ratings: https://www.linkreit.com/en/investor-relations/credit-ratings/
• Link REIT 2025 MTN offering circular publication announcement / offering circular link: https://www.linkreit.com/-/media/linkreit/investor-relations/regulatory-disclosure/announcements-and-circulars/2025/e_link-mtn-update-2025---oc-publication-announcement-dated-25-august-2025.pdf
• Link REIT Distribution: https://www.linkreit.com/en/investor-relations/distribution/
• S&P Global Ratings proposed USD notes release for The Link Finance (Cayman) 2009 Ltd: https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3507399