Hong Kong: Hong Kong REITs Update 

February, 2006 -

November and December 2005 saw the Hong Kong real estate investment trust (“REIT”) market burst into life, with the listing of three REITs on the Stock Exchange of Hong Kong – The Link REIT (Hong Kong retail and car parks), Prosperity REIT (Hong Kong commercial) and GZI REIT (office buildings in Guangdong, PRC). These REITs are the first to appear in the Hong Kong market since REITs were permitted by the Securities and Futures Commission (“SFC”) Code on Real Estate Investment Trusts back in August 2003. Media reports suggest that the successful launch of the initial REITs has given encouragement for several more REITs to list in the first half of 2006. The Link REIT listing has already led to a change in the regulatory environment, following news that a hedge fund had acquired a significant interest in The Link REIT. That prompted the SFC to issue a notice on 15 December 2005 reducing the threshold for investors to disclose their interest in a REIT from a 10% holding to a 5% holding. The new 5% threshold is the same as applies to shares in Hong Kong-listed companies under Part XV of the Securities and Futures Ordinance. The SFC now requires that REITs incorporate by reference the relevant provisions of Part XV in their trust deeds.



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