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Link REIT (SEHK: 823) is the largest REIT in Asia by market capitalisation, worth approximately HK$170 billion (US$22.1 billion). It’s also a constituent stock of the benchmark Hang Seng Index (^HSI) and a highly popular investment among investors looking for passive income.
Link REIT was listed on the Hong Kong market in 2005 in an initial public offering (IPO), pricing shares at HK$10.30 each. When the REIT listed on the market it had a portfolio valuation of HK$34 billion. However, over the last 14 years, Link REIT has seen its portfolio valuation grow to a staggering HK$218 billion.
Smart acquisitions and revenue growth
This was all on the back of prudent acquisitions, disposal and enhancement of properties in the REIT portfolio.
Growth was backed by increases in revenue which have swelled from HK$1.27 billion (end March 2016) to HK$10.04 billion as of the end of March 2019. This tremendous growth is the reason why Link REIT’s shares are currently trading for HK$81.80 (as at the time of writing).
What this means is that investors who invested in Link REIT at its IPO would have made a return of around 700% by just holding onto their shares over the past 14 years.
Dividend giant too
But hang on, doesn’t Link REIT also payout a distribution each year since it is a REIT after all? Well, that’s right, the past 14 years have seen the REIT dish out a cumulative distribution of HK$20.35 from 2006 to March 2019. This means investors would have made another 197% returns from dividends.
So, let’s put it all together. An investor who invested HK$10,000 in Link REIT at its IPO and held it until today would have turned that into HKD$99,700 (share price appreciation + dividends), implying a total return of close to a mind-blowing 900%.
Link REIT is thus a good example of the staggering returns investors can earn should they be able to pick the right companies and stick with them for the long term.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Saket Jhajharia doesn’t own shares in any companies mentioned.