Goldman Sachs has released a research report indicating that Wharf Real Estate Investment Company's (01997) interim results show a clear shift in management's capital allocation strategy. The dividend payout ratio has been increased from 65% to 90%, with the forecast dividend per share for fiscal year 2026 rising 43% year-on-year to HK$1.89, representing a dividend yield of approximately 5.8%. This is comparable to Link Real Estate Investment Trust's (00823) 6.4% yield and higher than most of its peers.

The investment bank has upgraded its rating for Wharf Real Estate Investment Company from "Sell" to "Neutral," raising the target price from HK$28 to HK$36. This implies a discount of approximately 40% to the forecast net asset value per share for fiscal year 2026.

Goldman Sachs believes that while the company's Times Square property faces competitive pressures and structural challenges in rental income remain unresolved, the dividend yield increase to 5.8% could drive a valuation revaluation. The firm has raised its forecast for Wharf Real Estate Investment Company's core earnings per share for fiscal years 2026 to 2028 by between 0% and 15%.