Land Bank of Taiwan (土地銀行) yesterday auctioned off its collateralized Zhongshan office building, originally owned by Shin Kong Life Insurance Co (新光人壽), to Mega International Commercial Bank (兆豐商銀) for NT$3.802 billion (US$111.8 million).
The closing price represented a 15.5 percent premium on the bank’s floor price of NT$3.293 billion, which could be a good sign for the market for office and commercial buildings with steady rental incomes.
After winning yesterday’s bid, Mega International said it believed the deal would be worthwhile once 95 percent of its floor space has been rented, generating an annualized 4.5 percent return through rent.
Charlie Yang (楊長達), director of real estate appraisal for DTZ, had estimated that the building’s floor space had a market value of NT$3.658 billion.
The liquidation will be used to repay a NT$2.83 billion five-year real estate asset trust (REAT) that was issued to institutional investors and is expected to mature in January, Land Bank of Taiwan said.
The deal will generate a capital gain of NT$544 million for Shin Kong, since the life insurer owns 56 percent of the REATs.
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