Research: Rating Action: Moody’s assigns an A2 rating to convertible bonds offered by Link REIT


Hong Kong, 22 November 2022 — Moody’s Investors Service has assigned a senior unsecured rating of A2 to the proposed convertible bond to be issued by Link CB Limited, an indirect wholly-owned subsidiary of Link Real Estate Investment Trust (Link REIT , Stable A2). The Notes are unconditionally and irrevocably guaranteed by Link REIT, Link Holdings Limited and Link Properties Limited.

The rating outlook is stable.

Link REIT plans to use the proceeds of the Notes to refinance existing obligations and for general corporate purposes.


“Link REIT’s A2 issuer rating reflects the stability of its core commercial property portfolio through economic cycles, its management’s track record of asset enhancement and excellent liquidity, said Stephanie Lau. , Vice President and Chief Credit Officer of Moody’s.

The rating also reflects the high stability of Link REIT’s business, which is underpinned by the non-discretionary goods and services offered by its tenants and the highly diverse tenant mix at its shopping centers in Hong Kong SAR, China (Aa3 stable).

In addition, the rating incorporates risks related to Link REIT’s high leverage, its concentrated operations in Hong Kong and the trust’s expansion and investment strategy.

The proposed bonds, which Moody’s considers 100% debt-like, will not have a material impact on the REIT’s credit metrics, as the rating agency expects the trust to use the majority of the proceeds to refinance existing debt. Even if all cash proceeds were to be used for other general corporate purposes, the potential increase in debt of this particular bond issue will still leave a financial buffer against the REIT’s quantitative downgrade triggers.

Without considering Link REIT’s foreign currency movements, new acquisitions or share buybacks, Moody’s expects the Trust’s Adjusted Net Debt/EBITDA to grow to 6.3x over the next two years from 6 .1x for the 12 months ended September 2022 (September 2022 LTM) . This expectation is based on assumptions that growth in net debt will more than offset a modest increase in earnings.

Specifically, Moody’s expects adjusted net debt to increase to approximately 55 billion HKD over the next 12-18 months, from 52 billion HKD as of September 30, 2022, primarily to finance outstanding purchase announced acquisitions and general working capital.

The rating agency expects Link REIT’s annual profits to grow in the low to mid-single digits, to around HKD 12.2 billion over the next 12 to 18 months, from HKD 11.9 billion in September 2022 LTM. Stable retail operations in Hong Kong, strong parking revenue and higher contribution from newly acquired assets will mitigate near-term weakness in the REIT’s commercial and office properties in mainland China, as well as higher general and administrative expenses.

Link REIT’s gross revenue and net property revenue increased 4.6% and 4.5% to HKD 6.0 billion and HKD 4.6 billion, respectively, in the first half ( S1) for the fiscal year ended March 31, 2023.

On the other hand, Link REIT’s adjusted net debt/EBITDA increased to 6.1x for the September 2022 LTM from 5.6x in fiscal 2022 as the increase in net debt outpaced the growth of EBITDA.

Environmental, Social and Governance (ESG) considerations have a neutral to low impact on Link REIT’s credit rating. Link REIT has moderately negative physical climate and carbon transition risks, which are offset by its neutral to low exposures to social and governance risks.


Link REIT’s stable rating outlook reflects Moody’s expectation that the Trust will take a conservative approach to its leveraged acquisitions, which will prevent a material adverse change in its business mix or leverage.

A Link REIT rating upgrade is unlikely for at least the next 12-18 months. In the medium term, upward pressure on the rating could appear if Link REIT further improves (1) the overall quality of its assets, (2) the scale and stability of rental income and (3) its leverage thanks to to a prudent investment strategy.

Downward pressure on the rating could arise if (1) Link REIT fails to maintain stable operations, or (2) its business and development risks increase significantly through aggressive debt-financed acquisitions outside of its core businesses in Hong Kong such that its Adjusted Net Debt/EBITDA exceeds 7.0x and its Adjusted EBITDA/Interest coverage falls below 3.0x-3.5x sustainably.

The main methodology used in this rating was REITs and other commercial real estate companies published in September 2022 and available on Otherwise, please see the Scoring Methodologies page on for a copy of this methodology.

Link Real Estate Investment Trust listed on the Hong Kong Stock Exchange on November 25, 2005 as part of a disposal exercise by the Hong Kong Housing Authority. It operates an internal management model that aligns the interests of unitholders and creditors. As of September 30, 2022, the trust had 152 investments across all sectors, including retail, logistics, office, parking and related businesses.


For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Moody’s rating symbols and definitions can be found at

For ratings issued on a program, series, category/class of debt or security, this announcement provides certain regulatory information regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or under a program for which ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a media provider, this announcement provides certain regulatory information relating to the credit rating action on the media provider and each particular credit rating action for securities whose credit ratings are derived from the support provider’s credit rating. For the provisional ratings, this press release provides certain regulatory information relating to the provisional rating assigned, and to a final rating that may be assigned after the final issuance of the debt, in each case where the structure and conditions of the transaction n have not changed prior to the final rating being assigned in a way that would have affected the rating. For more information, please see the issuer/transaction page of the respective issuer at

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The first name below is the primary rating analyst for this credit rating and the last name below is the person primarily responsible for approving this credit rating.

Stephanie Lau
VP – Senior Credit Officer
Corporate Finance Group
Moody’s Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queens Road
China (Hong Kong SAR)
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

Chris Park
Associate General Manager
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

Release Office:
Moody’s Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queens Road
China (Hong Kong SAR)
JOURNALISTS: 852 3758 1350
Customer Service: 852 3551 3077

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