Financial Institutions in HK Group 4 Real Estate Investment Trust

Table of Content The Time Frame of the LINK Comparison with 2004 and 2005 Offer Comparison with Prosperity REIT and the LINK MC Question

The Time Frame of The LINK

The Time Frame of The LINK: 24/11/2004 6/12/2004 8/12/2004 Incident: The Housing Authority announced that the LINK will go public, and funding around HK$230 billions. The LINK started to raised capital, and oversubscribe around 130 times Mrs. LO Siu Lan claimed that it would be offense the <Housing Ordinance> when the LINK go to public.

The Time Frame of The LINK: 14/12/2004 16/12/2004 18/12/2004 The Court of Appeal declare that unaccepted the judicial review addressed by Mrs. LO Siu Lan The Court of Appeal declare that the failure of appeal by Mrs. LO, Siu Lan The HK government declare that go public of the LINK was cancelled at 11pm

The Time Frame of The LINK: 4/2005 7/2005 9/2005 Mrs. LO, Siu Lan appeal to the Court of Final Appeal The Court of Final Appeal declare that the LINK can go public legalized. The Housing Authority applied for the LINK to SFC, and planning to go public in November

Comparison with 2004 and 2005 Offer

Comparison with 2 offers Subject 2004 offer 2005 offer Maximum Offer Price HK$10.51-HK$10.83 per unit HK$9.7- HK$ 10.3 per unit Maximum Invest- ment at Maximum Offer Price HK$ 5,469.80 HK$ 4939.48 Hong Kong Public Offer Discount 3% off 5% off Offering an Indicative Max 6.65% yield Max 6.31% yield

Comparison with 2 offers (con’t) Subject 2004 offer 2005 offer Purchasing with Margin Credit HK$ 2000 million HK$ 300 million Interest on deposit Nearly to 0% Around 2%-4% Over-subscribed 100times 18.5times Approved the Rate of Subscribe in HK Public 10% 30%

PROSPERITY REIT and LINK REIT Comparison between PROSPERITY REIT and LINK REIT

Basic comparison LINK領匯基金（０８２３） PROSPERITY泓富基金（０８０８） Offer Price (IPO) $10.3 ($9.78) $2.16 Offer price per one board lot (including other transaction costs) $4,939.48 $2,182 Earning after IPO day (excluding other transaction costs) $11.8 Earning $1010 $2.75 earning$440 Dividend per share 6.31% 5.3% Success buying probability (buying 1 lot) 100% 30% Oversubscribed (Public Offering) 18.5 times 259 times Purchasing with margin credit 300 million 830 million Latest Market Price(16/12/2005) HKD 14.1 (升36.8%) HKD 2.6(升20.3%)

Core Assets LINK領匯基金（０８２３） PROSPERITY泓富基金（０８０８） Investment portfolio retail facilities industrial and commercial building Core Assets -180項零售和停車場設施 -共有約96萬平方米的零售樓面（以室內樓面面積計） -約79,000個車位 -3幢寫字樓、3幢工貿樓宇、1幢工業大廈以及407個車位 -總可租樓面為122萬方呎， -總估值為45.38億元 紅磡都會大廈、海名軒、北角萬誠保險千禧廣場、荔枝角潮流工貿中心、觀塘摩登倉、創富中心及新蒲崗新寶中心的若干物業及車位等。

Consideration (1) Interest rate (2) Dividend per share 美國日前加息0.25厘，聯邦基金升至4.25厘水平(Ming Pao 16/12/2005) (2) Dividend per share 領匯（0823）基金價格昨天再升4%，收市報15.6元，創出上市以來的新高，以現價計算，領匯2006年度的股息回報率跌至只有3.9厘，不但低於風險極低的美國十年期國庫債券現息率4.4厘，亦低於大藍籌匯豐控股（0005）的4.26厘、恒生銀行（0011）的5厘股息率 泓富2006年度的股息率已跌至4.2厘。 (Ming Pao 16/12/2005)

(3)Rental income 泓富旗下物業有五成二租約將於明年到期，估計六至七成租客會續租，期望明年加租至少逾兩成 12月 7日 東方日報 長實（ 0001）注入泓富產業上市的紅磡都會大廈，今年續租、新租及擴租的成交宗數逾 40宗，續租的租金平均升幅達 94％，部分在樓市低位承租的樓面加租幅度更超過 140％ 2005-11-22明報 長實執行董事趙國雄昨天出席該廈的時裝表演時表示，今年整體工貿大廈的租金普遍錄得逾10％的升幅，旗下潮流工貿中心今年首三季已錄得22宗新簽租約成交，新簽租約的租金較年初上升近30％，若與舊租約比較，租金升幅更達到70％，預料該廈租金未來仍會穩步上揚 10月 31日 明報

(3) Rental Income 政府落實推行CEPA後，市場對工貿大廈的需求增加，不少在內地設廠的港商回流本港， 設置銷售、推廣等部門等，潮流工貿中心便受惠內地廠商回流 10月 31日 明報 投資界人士大多認為，領匯較泓富吸引，除了領匯息率較高，房委會旗下物業與民生相關，租金收入較穩定，加上過往的租金升幅很小，未來大有增長空間，「雖說長實是私人機構，加租沒有政治包袱，但長實泓富的物業是貨倉及寫字樓等二線物業，加租的空間不多。」 10月 31日 明報

(4)Rent out rate 泓富旗下七項物業的出租率８６％至９９％，當中約５５％出租物業將在２００６年重定租金，故泓富將將在寫字樓及工廈巿場升巿中受惠。12月 6日 《經濟通專訊》 領匯去年盈利37億港元，商場出租率超過九成，停車場過去三年，出租率也超過七成 《聯合早報》

MC

What reason that no strong evidence to show there is unattractiveness of offer in 2005? Provide more discount to the Public. The maximum yield was decrease. The margin credit to purchasing the LINK was decrease. The over-subscribed was reduced.

Which factors is least important when we are choosing REIT? Dividend per share Interest rate Rent out rate Number of units in each board lot Rental income

When did the government reapply the application for the LINK to SFC? 8/12/2004 16/12/2004 18/12/2004 7/2005 9/2005

Group 4 Members Jonathan Chan 033050 Ray Ip 033052 Kwan Lam 033062