1 TKO - The Matrix Idea That a REIT be the retail manager managing all the footbridge-linked retail GFA of the TKO gov’t sale sites. Background The blueprint for developers of the 11 TKO sale sites with a total residential GFA of 5.4 million sf have been basically settled with SHKP controlling exclusively the “gateway” to the MTR station which is as far as 400m away from those sites nearest the waterfront. The total retail GFA for all 11 sites (excluding the Wings retail GFA of 127,000sf) amounts to 873,000sf. The GFA are however discrete among the sites each having around 23,000sf to 147,000sf retail GFA. They might only be attractive to a few tenants and it is not optimistic that a very sound rental be captured if patronized mainly by residents within the site, while the four SHKP lots holding about 240,000sf, 28% of the above total and the three Wheelock lots 32%, being the two highest single owners on that basis. Besides, developers of other sites like Lai Sun, Ka Wah and even Wheelock do not have a proven track record of managing small to medium retail space well. Letting SHKP manage their portion would improve the value of their holdings while having all the retail GFA linked up by footbridges and managed as a whole would allow SHKP to enjoy others’ possibility of weekday brand outlets plus weekend waterfront seaview F&B in addition to its own asset value of being proximate to MTR. As a result, it would be like a “Matrix” unleashing the synergy, and could also be sold to interested investor. On the other hand, by the time the residents have moved in, it would become a very bad experience to walk outdoor at grade 400m to and from the MTR station every day unless the waiting time for feeder bus, if available, could be justified. It is however found that no footbridge requirement has been stipulated under the leases of all 11 sites for the developers to connect to each other facilitating a through pedestrian flow. To effect this, a lease modification with premium would be required. Unless otherwise altered or endorsed by the Lands D HQ, it is the Government’s policy that lease modification would not be entertained within 5 years from the date of land sale. Implementation It is basically costless to SHKP if the Footbridge connection would never be effected, but reaching an agreement with other developers during their design inception stage and at the same time allowing the design possibility within SHKP