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Cathay Financial to raise US$450m from REIT fund sale

Cathay Financial Holding Co (國泰金控), the nation's biggest financial services company by assets, said it plans to issue its first real estate investment trust fund, or REIT, to raise NT$14 billion (US$450 million) in the third quarter.

A REIT is a company that purchases and manages real estate loans, using money provided by shareholders.

Cathay Financial's board on Thursday approved a proposal to use the proceeds to buy three buildings in Taipei's commercial districts owned by the company, said Lee Chang-ken (李長庚), executive vice president of Cathay Financial. More sales could follow, he said.

The NT$14 billion property portfolio managed by Cathay Financial includes two office buildings and the Sheraton Taipei Hotel.

"We'll soon apply to regulators for the issue, and we probably can launch it in the third quarter," Lee said. "We plan to further securitize our financial assets in the future to boost the market and fuel our profits."

Lee said Cathay Financial has more than NT$1.2 trillion worth of financial assets that can be securitized, including more than NT$100 billion in real estate.

The Fubon No.1 REIT is the nation's first real-estate fund after the government approved an REIT law on July 9, 2003. The NT$5.83 billion-fund which started trading on the Taiwan Stock Exchange in March was launched by Fubon Securities Co (富邦證券), the brokerage arm of Fubon Financial Holding Co (富邦金控).

Fubon Securities said it will use the proceeds to buy three properties held by companies controlled by the Tsai Wan-tsai (蔡萬才) family, Fubon's owner.
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