Morgan Stanley expects LINK REIT to reduce its annual distribution per fund unit by 7.3% in the fiscal year 2026

Morgan Stanley published a report stating that LINK REIT (00823.HK) is expected to announce its financial results for the fiscal year ending March 2026 in May. Despite improvements in Hong Kong's retail sales, the bank anticipates that the distribution per unit for the fiscal year 2026 will decrease by 7.3% year-on-year due to declining rental income, while the market forecast is a reduction of 9.3%. This implies that the distribution per unit in the second half of 2026 will decline by 9.9% year-on-year.

The report indicates that the downward trend in renewal rents may continue until the first half of the fiscal year 2027, affected by lagging effects and a slower-than-expected recovery in mass retail. Additionally, the growth of online sales and the increasing penetration rate of e-commerce in China may pose a threat to LINK REIT's retail property portfolio. The bank has given LINK REIT a "market perform" rating with a target price of HKD 37