Link ?was the world?s biggest Reit IPO?
Updated at 6.42pm: Financial Services and the Treasury Secretary Frederick Ma Si-hang on Tuesday stressed the significance of last year?s LINK-REIT initial public offering in Hong Kong.
Mr Ma, speaking at the Hong Kong Trustees? Association Conference, noted that Hong Kong?s REIT market had a relatively short history.
?Our first REIT, the LINK, was listed in Hong Kong in November [last year] and is so far the largest IPO of REITs in the world.?
The LINK-REIT invests in a wide portfolio of 180 retail and car-park facilities serving about 40 per cent of Hong Kong?s population.
A REIT (real estate investment trust) is essentially a corporation or trust that pools capital from many investors to purchase and manage income property (equity REIT) and-or mortgage loans (mortgage REIT).
REITs are traded on leading exchanges in the same way as stocks. They have a number of advantages for investors ? they are very liquid (unlike traditional real estate) and there is no minimum investment with REITs.
The treasury secretary said the Link-REIT had continued to be supported by a broad range of institutional and individual investors.
?Since its debut, Hong Kong?s REIT market has been expanding quickly. At present, there are a total of four REITs with an aggregate market capitalisation of about HK$50 billion and a daily average turnover of about HK$373 million in the first half of [this year],? Mr Ma said.
Link-REIT properties involved a range of retail and commercial properties in Hong Kong to properties in the mainland.
?Given the size of the mainland real estate market and the appetite of investors for attractive yields and access to the mainland property market, our REIT market has substantial potential for growth in the coming years,? Mr Ma said.
The Link Management, which manages the LINK-REIT, was incorporated in February 2004 as a Hong Kong Housing Authority (HKHA) wholly owned subsidiary.
Mr Ma said REITs listed in Hong Kong are authorised by the Security and Future?s Commission?s. They were required to comply with the SFC code on REITs, including the establishment of a trust to own the underlying real estate.
?I am glad to learn that the SFC has received indications of interest in launching REITs with diversified international portfolios,? Mr Ma added.
The LINK-REIT was controversial in Hong Kong. In 2004, a 67-year-old public housing tenant Lo Siu-lan, raised a legal challenge to the IPO. She objected to the Housing Authority?s HK$21.3 billion privatisation of shopping malls and car parks.
In 2004, the government was also accused of assigning too many shares to international institutions despite strong local interest. After a legal challenge derailed its first attempt at an offering, the REIT went public the next year without anchor investors.
