1. Corporate Governance of Hong Kong-listed Real Estate Investment Trusts and their Prospects Alexa Lam Member of the Board & Executive Director Intermediaries and Investment Products Securities and Futures Commission 16 October 2006

2. 2 Hong Kong REIT Market Highlights (1) As at 31 August 2006

3. 3 Hong Kong REIT Market Highlights (2) Funds raised (HK$’B) Over- subscription Feature Link REIT19.4Public: 19 times Int’l: 19 times Globally the largest privatisation IPO Prosperity REIT1.9Public: 260 times Int’l: 19 times Exposure to both office and industrial properties GZI REIT1.8Public: 496 times Int’l: 74 times Globally the first REIT with 100% exposure to Mainland properties Champion REIT6.3Public: 6.5 times Int’l: 3.5 times Exposure to prime office property

4. 4 Emergence of REIT as a New Asset Class REITsListed property companies Business focusInvestment in income- generating properties May diversify into other unrelated activities Dividend policyPay out at least 90% of net income after tax Subject to decision of the Board BorrowingsLimited to 45% of gross asset value No limit Safe custody of properties Properties held on trust by an independent trustee Properties held by the company REITs have emerged as a new asset class for property owners to liquify their property holdings.

5. 5 Free and open economy 1st equity fund raising market in Asia and 3rd in the world Active retail and institutional participation Internationally renowned regulatory standard Hong Kong as a Preferred Destination for Mainland Listing

6. 6 General Principles of Corporate Governance Independence of REIT Manager, Trustee and Property Valuer Continuous oversight by the REIT Manager On-going disclosure responsibility Voting by unitholders

7. 7 Comprises of executive directors and INEDs Oversight of REIT activities through different committees Corporate Governance (1) REIT Manager - Board of Directors Audit Committee Finance and Investment Committee Disclosures Committee Board of Directors

8. 8 Corporate Governance (2) On-going Reporting Timely dissemination of price-sensitive information or information pertinent to an investment decision Deemed application of Part XV of SFO Adoption of a code equivalent to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules Financial reporting

9. 9 Prospects of Hong Kong REIT Market Market sources anticipate the market capitalisation of Asian REITs will attain the level of US$100 billion by 2010 The growth of REITs market in Hong Kong is driven by:  Spin-offs by locally-listed property companies  Spin-offs of property assets by non-property companies  REITs established by international asset managers  Listing of Mainland properties via REITs  Expansion through acquisitions by existing REITs

10. 10 Exposure to international institutional investors Stamp of approval for internationally recognised governance standards Significant market capacity with access to a broad investor pool Capital-raising in foreign currency Value of Hong Kong REIT Market to Mainland Enterprises

11. Thank You