700 Nathan Road is located in one of Hong Kong’s busiest shopping districts (Image: Link REIT)
One of Asia’s largest real estate investment trusts is parting with a Mong Kok commercial tower for 61 percent less than it paid to acquire it in 2016, with Link REIT agreeing to sell 700 Nathan Road for HK$2.3 billion ($293 million), according to a stock exchange filing on Friday.
Link paid HK$5.91 billion for the property in a 2016 government tender and is now selling the building, home to its TOP shopping centre, to a private company controlled by Hong Kong politician Bunny Chan, according to the filing.
The sale of the commercial complex connected directly to the Mong Kong MTR station is the third asset disposal Link has announced this year, following April’s sale of a Singapore mall and July’s sale of half of 100 Market Street in Sydney.
“We are focused on divesting non-core assets to simplify our business and create value for Unitholders,” Link chief investment officer John Saunders said in a statement, with the trust classing the tower as non-core because most of its income comes from offices.
Losing Ground in Mong Kok
The trust is selling its 284,767 square foot (26,456 square metre) Kowloon asset for the equivalent of HK$8,077 per square foot, compared with the HK$20,754 it paid to acquire it in 2016, according to Mingtiandi calculations.
John Saunders, executive director and chief investment officer of Link REIT’s manager (Image: LAML)
Link renovated the retail podium and positioned it as TOP (This is Our Place) in 2017, pitching it at younger shoppers with brands new to Hong Kong and pop-up concepts, with the shopping centre now dominated by food and beverage, fashion and lifestyle vendors. Link REIT did not specify capital expenditures involved in renovating the property.
Offices occupy the 6th to 20th floors and were 94.4 percent occupied at the end of September, according to Knight Frank, with tenants including sports retailer Decathlon, Japanese publisher Kadokawa, telecommunications company 1GLOBAL, engineering and technology firm Ryowo and serviced office operator Regus.
The property earned net property income of HK$100.1 million in the year to March, equal to about 4.4 percent of the sale price and above the 3.7 percent capitalisation rate Link’s valuer applied in March.
The sale price is 8.6 percent less than a HK$2.5 billion valuation provided by CBRE in September and 13 percent below its book value in March, leaving Link with an estimated net loss of about HK$372 million. The deal involves Chan assuming about HK$7.4 billion in debt linked to the property with completion expected on 29 January 2027. Knight Frank represented both Link and the buyer in the transaction, according to the consultancy.
Decade of Markdowns
Link won the tender for what was then the Trade and Industry Department Tower in February 2016 with plans for a Ginza-style tower with a retail and service theme.
Its valuers put the property at HK$6.1 billion in March 2017, during the renovation, and at HK$5.5 billion two years later with TOP open, before the value fell 21 percent in the year to March 2020 and slid every year after to HK$2.6 billion this March.
The sale price is 64 percent below the HK$6.4 billion at which Link’s accounts first carried the property, including transaction costs, with the property having lost 10.9 percent of its value in the year to March.
Link will keep managing the property for the new owner, and will take 20 percent of any proceeds above HK$2.3 billion if Chan’s company sells the tower, or a stake in it, within five years, with that threshold rising 5 percent a year.
Buybacks and Reinvestment
Proceeds from the 700 Nathan Road sale are earmarked for unit buybacks, working capital and reinvestment in Link’s core portfolio, according to the statement.
Link has spent more than HK$1 billion on unit repurchases between July and early September, a period in which the units rose about 5 percent, from HK$37.92 on 3 July to Friday’s close.
Link’s units closed on Friday at HK$39.82, up 14.6 percent from HK$34.74 at the end of 2025 but 2.9 percent below their level a year ago. The sale of 700 Nathan Road was announced after Friday’s market close.
Link Sells, Chan Buys
The 700 Nathan Road disposal follows Link’s S$250 million (then ($196.3 million) April sale of the Swing By @ Thomson Plaza in Singapore with the trust following up in July with a deal to sell a 50 percent stake in the 100 Market Street office tower in for A$225.9 million ($158 million).
Earlier this year Link engaged brokers to explore a sale of The Cabot, its sole property in the UK and told analysts in September that it did not expect to hold its China logistics asset long term.
Saunders said in May that 5 to 10 percent of Link’s portfolio is non-core and potentially targeted for divestment, with that proportion representing HK$10.8 billion to HK$21.7 billion of assets.
For Chan, the purchase follows a run of discounted Hong Kong deals, with the South China Morning Post reporting in January that the former chair of the Kwun Tong district council and current deputy to China’s National People’s Congress had purchased a set of apartments at 8 Stanley Beach Road for HK$310 million.
In 2024 Chan was reported to have purchased a hotel in Hong Kong’s Tin Hau area for HK$268 million.
