Shin Kong Life Insurance Co (新光人壽) yesterday said it had bought an office building in a Taipei science park, as the nation’s second-largest life insurer continues efforts to seek satisfactory investment returns for shareholders after incurring equity losses.
In a filing to the Taiwan Stock Exchange, Shin Kong Life, a subsidiary of Shin Kong Financial Holding Co (新光金控), said it purchased a 12-floor Primax Electronics Ltd (致伸科技) building with three basement levels in the Neihu Technology Park (內湖科技園區) for NT$2 billion (US$60.1 million).
The sum compares with appraisals made by DTZ Debenham Tie Leung (戴德梁行) of NT$2.24 billion and Honda Appraisers Joint Firm (宏大不動產) of NT$2.01 billion, the filing showed.
Shin Kong Life said it first purchased the building, with a floor space of 21,944.53m² (6,650 ping), and then leased it back to Primax Electronics for 15 years.
The company, however, did not specify in the filing how much yearly fixed rental income it expected to receive from its tenant. The Chinese-language United Evening News reported yesterday the deal would create a 4 percent rate of return to the company annually, citing an estimate made by Shin Kong Life’s real estate investment division.
Shares of Shin Kong Financial ended 5.14 percent lower at NT$8.68 yesterday before the investment was announced. The stock has dropped 61.1 percent so far this year, underperforming the benchmark index’s 47.3 percent decline over the same period, stock exchange tallies showed.
During the first 11 months of the year, Shin Kong Financial reported NT$16.1 billion in losses, or a NT$2.92 loss per share, making it the worst performer among the nation’s 14 financial holding services providers. The company had attributed its poor performance to declines in global stock markets and investment writedowns linked to Lehman Brothers.
Shin Kong Life’s latest real estate investment came after the company announced in October that it authorized its chairman, Eugene Wu (吳東進), and its management team to invest in quality real estate in Taiwan, especially in Taipei’s Neihu, Xinyi (信義) and Nangang (南港) districts, with a maximum investment of NT$20 billion.
Including the newly-purchased building, the life insurer currently has owned eight office buildings in the Neihu district, including two BenQ Corp (明基) buildings it acquired in July last year for NT$5.37 billion.
Overall, Shin Kong Life has invested more than NT$10 billion in the Neihu office building market, which is likely to generate a fixed rental income of NT$500 million annually, if these buildings are fully occupied by tenants, the online Cnyes.com news outlet reported yesterday, without siting its source.