Time to put Link REIT on a tight leash

November 20, 2017 11:21
The Link REIT is working aggressively to sell another 17 shopping malls for an estimated HK$14.5 billion. Photo: HKEJ

Last month, pro-democracy parties such as the Democratic Party, Demosistō, the League of Social Democrats, the Neighborhood and Worker’s Service Center, the Hong Kong Association for Democracy and People's Livelihood as well as the Labor Party held a press conference announcing the details of their latest anti-Link REIT campaign.

The movement was in response to the recent decision by the company to carve out 17 of its shopping malls and put them up for sale.

The Link REIT has already sold 28 of its shopping malls in our public housing estates for HK$11.96 billion over the past three years.

Yet, the company seems to have a voracious appetite for profits, and is now working aggressively to sell another 17 shopping malls for an estimated HK$14.5 billion.

Let’s not forget that this huge profit is going into Link REIT’s pocket at the expense of our public housing estate residents and small business owners.

And as far as Link REIT is concerned, things may be just falling into place when it comes to selling its properties for big bucks. However, as far as those shopping malls it has already sold are concerned, they are falling apart.

For example, the Tin Ma Court Commercial Centre in Wong Tai Sin, which were sold by Link REIT in June last year, has been so poorly run and maintained by the current management services company that a lot of its basic facilities are in appalling condition: its escalators aren’t working properly and the brick flooring is broken into pieces, not to mention that the entire mall is plagued by rats.

To make things worse, the new owners of these shopping malls have been going to great lengths to evict small neighborhood stores and social welfare organizations from their properties by refusing to renew their tenancy agreements or imposing rent or property management fee hikes so as to force them to leave.

For instance, since the Kwong Tin Commercial Centre in Lam Tin was sold in 2015, five welfare non-governmental organizations (NGOs) have been forced to relocate to other places.

It is estimated that the 17 shopping malls the Link REIT is about to sell are currently home to at least 19 welfare NGOs, including youth centers, nursing homes, women’s and child day care centers.

It is not difficult to imagine what would happen to these organizations and the grassroots citizens who are benefiting from their services after these malls are sold.

During her the election campaign for chief executive, Carrie Lam Cheng Yuet-ngor said there were three big mountains in front of her, and one of them was the Link REIT.

She said the Link REIT was the most difficult one to deal with, because it is an entirely business-driven company and is therefore very hard for the government to intervene.

However, the fact that the Link REIT is a huge tough mountain doesn’t mean our government can skirt around it.

In fact, back in 2005 when the Housing Authority spun off its public housing estate shopping malls and injected them into Link REIT, a special clause was added to their contract under which the company must rent out units of these malls to social welfare organizations at below market rate.

That said, rather than sitting on the sidelines doing nothing, I believe the government should turn up the heat on Link REIT and order the Securities and Futures Commission to invoke article 3.2(b) of the Code on Real Estate Investment Trusts and find out if the Link REIT has violated its agreement with the Housing Authority.

It is time for the government to put the profit-guzzling and defiant Link REIT on a tight leash.

This article appeared in the Hong Kong Economic Journal on Nov 14

Translation by Alan Lee

[Chinese version 中文版]

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Legislative Council member