Widow’s Lawsuit Blocks Offering of Hong Kong REIT

A Hong Kong widow on welfare who on Sunday blocked the listing of a massive initial public offering of a property trust said she wanted to make sure the Housing Authority met its obligations to tenants.

“The Housing Authority is selling our assets so cheaply,” 67-year-old Lo Siu Lan said. “I’m very angry, so I have to stand out.”

That anger forced the government to delay the listing of the $2.7-billion Link real estate investment trust until Lo’s case is resolved. The decision, six days after Lo filed a lawsuit, capped a legal battle that captivated the city as challenge and counter-challenge sent the suit to Hong Kong’s top court.

A ruling by the Court of Final Appeal on Friday denied the government’s bid to reduce Lo’s appeal time to a few hours from 28 days, a verdict that left too much doubt for the sale to proceed.

Handing down that ruling against the government, Chief Justice Andrew Li said: “Justice must be done and must be seen to be done.”

Lo lives alone in Kwai Chung, a suburb in the city’s northern district about 40 minutes from the central financial district, and receives a monthly welfare check of HK$3,331 ($428).

“I came out today for the residents,” Lo said at a news conference Friday. “I don’t have to hide. You’re giving trouble to my neighbors.”

Hong Kong’s Housing Authority has $18 billion in assets and provides homes for almost half of the city’s 7 million residents. Victor So, 58, the chief executive of Link Management Ltd., which runs the authority’s property trust, earns a basic annual salary of HK$5 million ($643,000), with a bonus of at least 30%.

Lo filed the lawsuit with another tenant, 77-year-old Ma Ki Chiu, arguing that the property trust, known as the Link REIT, violated the authority’s obligation to provide shopping and parking facilities to residents.

Ultimately Lo may lose her appeal, considering that two courts have already dismissed her case. The Housing Authority says it plans to start the public offering again in January once the appeal is resolved.

Lo’s original lawsuit was funded by legislator Albert Cheng, who formerly hosted a popular radio talk show called “Teacup in a Storm” that challenged the government on issues of democracy and social justice.

Hong Kong law firm Barnes & Daly, which previously represented mainland Chinese in their bid for right of abode in Hong Kong, is working for Lo.

“I’m resisting of my own will; no one is manipulating me,” Lo said at a crowded news conference in the city’s Causeway Bay shopping district last week. “Deep in my heart, of course I want to appeal, but I have to consult with the lawyers.”

Lo does have support. The more than 3 million residents in the city’s public housing estates are concerned that their subsidized rents may rise.

Late Sunday it was unclear how the Housing Authority -- which was advised on the sale by Goldman Sachs Group Inc., HSBC Holdings, UBS and J.P. Morgan Chase & Co. -- would refund investors. The company sent out checks Thursday giving refunds to those investors who were granted fewer shares than they ordered and paid for.

The REIT IPO attracted orders equal to 28 times the amount of stock on offer. More than half a million Hong Kong residents placed a record $36 billion of orders, and institutional investors were ready to commit $40 billion.

Lo isn’t sure whether she will go to the Court of Final Appeal after the High Court dismissed her case and Ma withdrew from it. She has 28 days to decide.

“When you buy a chicken,” said Lo before Sunday’s decision, “you don’t know when it will lay an egg.”