HONG KONG: SFC Update on FAQs and Guidance on Real Estate Investment Trusts

Friday April 24 2020

On 24^th April 2020, the Securities and Futures Commission (SFC) published the Updated Frequently Asked Questions relating to Real Estate Investment Trusts (added Question 26A.)

Question 26A

Whether a REIT may engage another qualified valuer to conduct valuation on a target property proposed to be acquired by the REIT where the Principal Valuer is not considered independent under 6.5(d) of the REIT Code?

Answer: Under 6.2 of the REIT Code, the Principal Valuer shall produce a valuation report on real estate to be acquired by a REIT. In some acquisition cases, there may be circumstances under which a Principal Valuer may not be considered independent pursuant to 6.5(d) of the REIT Code.

For example, in cases where the target property proposed to be acquired by the REIT has previously been valued by the Principal Valuer for the vendor; or where a property is being marketed exclusively by the firm of the Principal Valuer (e.g. through a public tender) and the REIT is interested to acquire the same.

In such circumstances, a REIT may engage another qualified valuer to conduct valuation on the target property provided that such valuer can satisfy the acceptability criteria under 6.4 to 6.7 of the REIT Code and the valuation report can comply with the relevant requirements under 6.8 to 6.9 of the REIT Code.

In view of the vital role undertaken by the Principal Valuer, it is important to ensure its independence. REIT managers should consult the SFC at the earliest opportunity should the appointment of another qualified valuer be necessary for any reasons

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