Investors yesterday gave a warm welcome to a NT$5.83 billion real-estate investment trust (REIT) listing, lifting the stock to close at NT$10.45 from an offer price of NT$10 on the Taiwan Stock Exchange.
The stock had earlier jumped 7 percent to NT$10.70 as investors bet on a prosperous outlook for the local property market, but it later pared gains to 2 percent in the morning session.
The Fubon No.1 REIT is the nation's first real-estate fund after the government approved an REIT law on July 9, 2003.
An REIT is a company that purchases and manages real estate or real-estate loans, using money provided by shareholders.
The NT$5.8 billion property portfolio owned by Fubon No.1 REIT includes two office buildings and one serviced apartment in Taipei, which Taiwan Ratings Corp (中華信評) said in a statement is of above-average quality in terms of the domestic real-estate market.
The fund will generate an annual return of 4 percent on rent proceeds when the three buildings are fully occupied, Fubon said in its prospectus.
"The Fubon property fund enjoys a premium status, being Taiwan's first," said Liu Ju-ming (
"It offers a more liquid channel to invest in the property market," he said.
Following the trading debut of Fubon No.1 REIT, Taiwan Ratings yesterday assigned a "twA-" long-term rating for the fund, with a stable outlook. Taiwan Ratings is a local arm of international rating agency Standard & Poor's.
The rating reflected the trust fund's "good asset quality and tenant mix," Taiwan Ratings said in its statement.
In Taipei, the office vacancy rate hit a record of 25 percent in 1993 and dropped to a low of 2.8 percent in 2000. Taiwan Ratings said the rate may have increased to 13.5 percent last year, following an addition of 297,500m2 (90,000 ping) of new floor space, including the Taipei 101 tower.
As new supply is expected to stay low this year into next, Taiwan Ratings said it expected Fubon No. 1 REIT's office properties to maintain a strong occupancy rate in the medium term.
With about 66 percent of total rentals of the trust fund's properties coming from Fubon Financial Holding Co (富邦金控) members, Taiwan Ratings said it expected lease renewals to proceed smoothly.
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