HONG KONG: SFC Consultation on amendments to Code on Real Estate Investment Trusts

Monday January 27 2014

The Securities and Futures Commission (SFC) of Hong Kong has launched a one-month consultation on proposals to amend the Code on Real Estate Investment Trusts (REIT Code) to introduce flexibility in the investment scope of real estate investment trusts (REITs).

The proposals in the consultation paper have been formulated during the past year following the SFC’s meetings with various industry participants and the Committee on REITs. Taking into account the comments received and developments in comparable overseas jurisdictions, the SFC has considered that it is an appropriate time to amend the REIT Code.

In essence, the proposals seek to introduce flexibility for REITs to:

• invest in properties under development or engage in property development activities; and
• invest in financial instruments, including listed securities, unlisted debt securities, government and other public securities, and local or overseas property funds.

The above proposals are subject to relevant restrictions such that a REIT will maintain its profile as primarily a recurrent rental income generating vehicle, and also to ensure transparency of its activities. Details of these restrictions, including maximum thresholds on the investments, disclosure and reporting requirements, are set out in the consultation paper.

The public is invited to submit their comments to the SFC on or before 26 February 2014. Written comments may be sent via the SFC site (www.sfc.hk), by email to reitsconsultation@sfc.hk, by post or by fax to 2877 0318.

Click on the above link for the Consultation Paper.