Product details

This is the first of a two-case series (206-044-1 and 206-046-1). Real Estate Investment Trusts (REITs) have proven to be popular investment vehicles in countries including the US, Australia, Singapore and Japan. They work by using the pooled capital of investors to purchase or manage property. Issued shares are traded on exchanges (in the same manner as stocks and mutual funds) and increase or decrease in value according to variations in the value of the trust''s property portfolio, rental income or other factors. To ease a growing budget deficit, the Hong Kong government''s Housing Authority made plans to launch the territory''s first publicly-listed REIT, in hopes of raising much needed capital from the market. The privatisation plan involved selling retail and car parking spaces within public housing estates to the incorporated Link Property Trust. However, the listing was held back due to the lawsuit raised by the public housing tenants, who worried the future management of the assets would not meet the needs of the existing tenants adequately. This case illustrates the legal challenges facing a government, and the associated impacts to the key stakeholder groups, in a privatisation programme. In addition, it also demonstrates the importance of a well-structured institutional framework in privatisation.