Thu, Dec 16, 2010 - Page 12 News List

Fubon Life wins bid for pricey plot by mistake

OOPS:The company sought to annul the auction, apparently after discovering it had accidentally placed a NT$1.22bn bid on a plot intended for low-cost student housing

By Crystal Hsu  /  STAFF REPORTER

Fubon Life Insurance Co (富邦人壽), a subsidiary of Taiwan’s -second-largest financial firm, Fubon Financial Holding Co (富邦金控), yesterday won a 50-year surface rights lease from the government for NT$1.22 billion (US$40.07 million), 40.56 times higher than the plot’s NT$29.44 million floor price.

However, Fubon Financial issued a brief statement in the evening that it had bid on the wrong target, saying the offer was -intended for a separate auction on a 50-year lease to develop a larger plot of land for a residential housing complex.

“The company has filed applications to nullify the auction outcome,” Fubon Financial said in a statement.

The Ministry of Finance’s National Property Bureau held two auctions to lease two plots of land, one measuring 348 ping (1,150m2) on Hangzhou S Road near Chiang Kai-shek Memorial Hall and one measuring 538 ping on Renai Road Sec 4 near Pacific Sogo Department Store.

The government has limited the former to construction of low-priced student housing units, but has placed no constraint on the latter as it falls under different zoning rules.

Fubon Life’s bidder tried to lodge a protest upon winning the bid, but property bureau officials blocked the speech attempt, saying no change is allowed after the announcement of the outcome.

Eagle Lai (賴一毅), associate -director of the investment department at DTZ, an international real-estate provider and organizer of the auction, said Fubon Life apparently made a mistake when putting down the bid figures.

Hung Poo Real Estate Development Co (宏普建設) offered the second-highest bid at NT$108.88 million, NT$1.11 billion behind Fubon’s offer. The auction drew 15 participants, mostly medium-sized domestic land developers.

Lai said Fubon Life could pull out of the deal by failing to carry through the next step of the process and waiving its NT$2.94 million deposit.

The insurer has actively sought to increase its stake in real-estate investments in recent years to better utilize idle funds amid low capital costs. As of June 30, its real-estate investment amounted to NT$59.6 billion, generating 4.7 percent returns, company data showed.

If Fubon Life had placed the bid on the intended target, it would still have lost out on the deal to Radium Life Tech Co (日勝生), parent of a local land developer, to develop the 538 ping plot of land into a residential housing complex.

Radium Life Tech won the contract for NT$2 billion, or 1.4 times higher than the NT$837.42 million floor price. Major construction firms, including Hung Poo Real Estate Development Co (宏普建設), Huang Hsiang Construction Co (皇翔建設), Kindom Construction Corp (冠德建設) and Huaku Development Co (華固建設), took part in the auction, as did Taiwan Life Insurance Co (台灣人壽).

Jeffry Huang (黃增幅), a manager at Evertrust Rehouse Co (永慶房屋), said the plot promises a high potential return because of its prime location and the absence of housing limits.

Radium Life Tech, which earlier won a 50-year contract for an adjacent plot of land, may formulate a bigger development plan to maximize the synergy effect, Huang said.

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