Link REIT agreed to sell 700 Nathan Road, the Mong Kok office and shopping complex that houses its T.O.P This is Our Place mall, for HK$2.3 billion, about 61% less than the HK$5.91 billion it paid for the building a decade ago.

The deal, announced after the market closed on Friday, Oct. 30, puts a hard number on how far Hong Kong commercial values have fallen since the mid-2010s. For investors in one of Asia's largest REITs, it also shows management is willing to book losses to shrink the portfolio and fund unit buybacks.

Link's manager said it signed an agreement with Han Bliss Global Limited to sell its entire interest in the property and will stay on as asset manager for the new owner. Completion is expected in the first quarter of 2027. The exchange filing sets the completion date at Jan. 29, 2027, and names the buyer's sole owner as Hong Kong businessman and politician Bunny Chan Chung-bun.

Why Link REIT calls 700 Nathan Road non-core

Link said most of the building's income comes from offices, which put it outside the "back to basics" strategy of owning and running shopping malls and car parks across Asia Pacific. John Saunders, executive director and chief investment officer, said in the statement that the sale lets Link "release capital" while earning fees from managing the asset.

The building, with offices on the sixth to 20th floors, was 94.4% occupied at the end of September, according to the filing. Office tenants include Decathlon, Japanese publisher Kadokawa and Regus. Knight Frank advised both sides on the deal, Mingtiandi reported.

The property produced net property income of HK$100.1 million in the year to March, according to the filing. That works out to roughly a 4.4% yield on the sale price, above the 3.7% capitalization rate Link's valuer used in March, according to Mingtiandi.

A decade of markdowns on a Mong Kok landmark

Link won the former Trade and Industry Department Tower at a government tender in February 2016. At the time, Link chief executive George Hongchoy called it Link's first commercial property in a core Hong Kong district and said the trust would hold it for the long term. The plan was a "Ginza-style" tower with a retail and service theme, connected underground to Mong Kok MTR station. The complex has about 284,800 square feet of gross floor area, according to the 2016 release.

Link renovated the retail podium and reopened it as T.O.P, aimed at younger shoppers with brands new to Hong Kong and pop-up concepts. The value did not hold. According to Mingtiandi, valuers put the property at HK$6.1 billion in March 2017 and HK$5.5 billion two years later, before annual declines took it to HK$2.6 billion in March 2026.

The agreed price works out to about HK$8,077 per square foot, against about HK$20,754 in 2016, by Mingtiandi's calculations. It is 8.6% below the HK$2.52 billion value CBRE put on the property at Sept. 30 and 13% below its HK$2.64 billion March book value. Link estimates it will book a net loss of about HK$372 million on the sale, with net proceeds of about HK$2.28 billion.

There is a small upside clause. Link will receive 20% of any value realized above HK$2.3 billion if the buyer sells the tower, or a stake in it, within five years of completion, with the threshold rising 5% a year, compounded, according to the filing.

Third disposal of 2026 and the buyback question

The Mong Kok sale is Link's third announced disposal this year. In April it sold the Swing By @ Thomson Plaza mall in Singapore for S$250 million, according to Mingtiandi. In July it agreed to sell a 50% stake in the 100 Market Street office building in Sydney to Aware Real Estate for about A$226 million, saying at the time that proceeds would fund buybacks and reinvestment in its core retail portfolio.

Saunders said in May that 5% to 10% of the portfolio is non-core and could be sold, Mingtiandi reported, a range it put at HK$10.8 billion to HK$21.7 billion of assets. The trust has also hired brokers to explore a sale of The Cabot in London, its only U.K. property, and told analysts in September it did not expect to hold its China logistics asset for the long term, the outlet said.

Link has already been buying back units. It spent more than HK$1 billion on repurchases between July and early September, according to Mingtiandi. The units closed at HK$39.82 on Friday before the announcement, up 14.6% this year but 2.9% lower than a year earlier.

The first test of the market's reaction comes when Hong Kong trading opens on Monday, Nov. 2. Beyond that, investors will watch the January completion date and whether Link names a buyer for The Cabot as it works through the rest of its non-core list.