Hong Kong REIT proposal

Hong Kong’s SFC Proposes to Grant Greater Investment Flexibility to REITs (Regulation Asia)

June 10, 2020- REITs will be given more flexibility to invest in minority-owned properties and property development projects, and borrowing limits will be increased.

Hong Kong’s SFC (Securities and Futures Commission) has initiated a consultation seeking feedback on proposals to amend the Code on Real Estate Investment Trusts (REITs).

The proposed changes include allowing REITs to make investments in minority-owned properties, subject to certain conditions. Currently, a REIT can only invest in minority-owned property up to an existing limit of 10% of GAV (gross asset value). All other properties must be majority-owned.

Under the proposals, REITs will also be allowed to invest in property development projects in excess of the existing limit of 10% of GAV, subject to unitholders’ approval and other conditions.

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