Hong Kong Court Gives Go Ahead To Link REIT

by Mary Swire, Tax-News.com, Hong Kong

21 July 2005

Hong Kong's Court of Final Appeal on Wednesday rejected an application by an elderly resident of the territory for a permanent ban on the government's US$3 billion real estate investment trust (REIT) plan.

The launch of the massive REIT offering - which includes 180 car parks and almost 1 million square metres of retail space - was set to take place last December, but Lo Siu-lan, an elderly resident of government-owned accommodation submitted a last minute application for a judicial review, in which she argued that the deal undervalued the assets, and could lead to higher costs for tenants.

However, in an unanimous judgment, Hong Kong's highest court held that the Housing Authority "plainly has the power to sell the... retail and car park facilities to the Link REIT."

The decision brings to an end an embarrassing episode for the Hong Kong government. Some half a million private investors had signed up for shares in the world's largest share sale by a property trust, in addition to several large investment firms.

"We are pleased to note that the CFA today (July 20) has unanimously ruled that the sale of the retail and carpark facilities by the HA to The Link Real Estate Investment Trust (The Link REIT) is within the capacity of the HA," commented Chairman of the Hong Kong Housing Authority, Mr. Michael Suen.

"Following the CFA judgment bringing finality to the whole legal proceeding and reaffirming the legality of our divestment exercise, it remains the intention of the HA to re-launch the Initial Public Offering of the Link REIT as soon as practicable," he added.

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