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Hong Kong Link Reit ‘Was Not Undervalued’, Says Government

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

02 December 2004


The Hong Kong government has been forced to defend itself against claims that it is selling off its property assets too cheaply via the Link Real Estate Investment Trust, which commences trading later this month.

According to Permanent Secretary for Housing Leung Chin-man, the Link Reit was priced by independent valuers CB Richard Ellis under the rules of the Securities and Futures Commission, using the discounted cashflow method to arrive at a figure of HK30.8 billion (US$3.96 billion).

However, according to a report in The Hong Kong Standard, investment banking analysts, using a different calculation known as the capital market valuation approach, arrived at a total valuation of between HK$31.1 billion and HK$38.3 billion.

Leung countered suggestions that the final valuation was undershot or that the Housing Authority had an influence on the final valuation.

“The Housing Authority did not influence the valuation results, nor was there any room for negotiation,” he stated.

“There is no question of under-valuation,” Leung reiterated.


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