Clearly, the Link is no ordinary landlord
Concerns over its business practices are valid, but the reit also has a duty to shareholders; a way must be found to balance its responsibilities
It is rare for the administration’s No 1 and No 2 officials to call a listed company to account for its business practices – even more so when it is a successful government privatisation of part of the city’s biggest landlord. An extraordinary attack on property investment trust the Link Reit has been defused, for the time being at least, in an anticlimactic outcome to a meeting with Chief Secretary Carrie Lam Yuet-ngor.
The meeting came after Chief Executive Leung Chun-ying questioned whether the trust, which operates car parks, malls and markets on Housing Authority estates, is putting profit before people by linking the compensation of its executives with rental revenues to maximise profit. “They are not a developer,” he said, referring to concerns about high rents and small tenants being forced out. Lam was cited as having told lawmakers that solutions might include a government-led battle against the Link.
Lam says that at the meeting, requested by the Link, she reminded it to abide by land leases and conditions in managing, selling or leasing out its public housing estate malls and car parks, including rental discounts to educational and welfare groups. But at a press conference later, she stopped short of elaborating on a vow to implement “our own measures” to provide more affordable alternatives to low-income tenants. This followed criticism of a profit-driven business model that includes sales or leases to buyers who then further raise rents and fees, forcing out small tenants and scrapping discounts for disabled people. A company spokeswoman says it is reviewing its system of selling properties and leasing some wet markets to single operators.
While it has a duty to its shareholders to maximise profit, the Link has a wider social responsibility. In that respect it should bear in mind that its major stakeholders include public housing tenants. That said, the Link’s review is welcome. We trust it does not merely pay lip service to community concerns, given that it is not feasible for the government to solve the problems with a buy-back. Ideally, the company should work with the government to find solutions for the good of shareholders and stakeholders.