Hong Kong Listed Link REIT acquires 100 Market Street for $683m

19 December 2019

Hong Kong's Listed Link REIT has announced the acquisition of 100 Market Street for $683m from global investment group Blackstone.


The property was one of three commercial assets Blackstone acquired from SCentre in June this year, paying $1.5bn for the combined assets. That deal represented about $19,766/sqm of NLA and would have priced 100 Market St at $571m if equally apportioned.


The deal with Link REIT equates to $21,938/sqm of NLA and was struck on a yield of 3.9%.


The transaction is Link's first acquisition outside Hong Kong and the PRC. Link states that the acquisition is in line with the current investment strategy of Link to invest in yield-accretive and income producing real estate which has potential for long-term growth.


The 28,900sqm building is fully leased offering a WALE of 8 years.


The property is yeld under a 299 year leasehold interest and forms part of the mixed use development which includes Westfield Sydney, 77 Castlereagh Street and 85 Castlereagh Street, as well as an observation tower known as Sydney Tower . The purchaser also acquired a 1% interest in the freehold real estate which had been held by Blackstone.


The transaction will take place via a unit sale agreement in the holding trust and will be conditional upon the purchaser obtaining FIRB approval within 90 days. Completion will occur 5 days after receipt of the FIRB approval.


According to Link, the acquisition interests have been separated into three different unit trusts; a Leasehold Trust, a Buyer Trust and a Holding Trust. These trusts will ensure that any future capital gains from the Leasehold interests are taxed as an MIT at 15%, as opposed to 30%.


The Leasehold Trust, the Buyer Trust and the Holding Trust, and their respective trustees, should not have any liability for Australian income tax (i.e. the trusts are treated as flow-through trusts for Australian income tax purposes) as it is intended that all of the net income of the trusts will be distributed or attributed to their relevant unitholders each income year. The underlying unitholders will be subject to the MIT withholding tax rate of approx 15% where the Link BVI Entities are residents of the BVI.


To qualify as an MIT, Link will engage Perpetual to act as its investment manager