Shinkong Synthetic Fibers Corp (新光合纖), a member of the Shin Kong Group (新光集團), yesterday won the bid for the real-estate asset trust (REAT) issued by Shin Kong Life Insurance Co (新光人壽) with a 65.7 percent premium.
The auction outcome lent support to the rosy outlook for commercial properties even though the forthcoming luxury tax is cooling housing transactions, real-estate analysts said.
Shinkong Fibers, owned by Eric Wu (吳東昇), won the -auction for NT$3.52 billion (US$48.25 million), 65.7 percent higher than the floor price set at NT$2.12 billion, organizer Mega International Commercial Bank (兆豐國際商銀) said. Eric Wu is the brother of Eugene Wu (吳東進), the chairman of Shinkong Financial Holding Co (新光金控), which holds Shin Kong Life as a subsidiary.
The real estate-backed securitization includes one 11-story office building on Songjiang Road, a 10-floor building on Chengde Road in Taipei, and a 12-story building in Banciao (板橋), New Taipei City (新北市).
The expiration of the four-year trust mandated the auction, which drew seven bidders, including Shin Kong Life, Taiwan Life Insurance Co (台灣人壽), Fubon Life Insurance Co (富邦人壽), China Life Insurance Co (中國人壽) and others.
Gordon Kao (高銘頂), general manager of Savills Taiwan Ltd (第一太平戴維斯), a real-estate service provider, said the bidding result indicated demand for commercial properties remained strong amid excessive liquidity and low interest rates.
“The real-estate investment may win Shinkong Fibers -regular rental returns of between 2 -percent and 2.5 percent a year with guarantee of value increases for the properties themselves later,” Kao said by telephone.
Taiwan’s stable economic recovery and warming trade ties with China bode well for demand for office space, Kao said.
The building on Songjiang Road reported an occupancy rate of 70 percent as of the end of last year, while the other two buildings are fully occupied.
Tseng chin-der (曾敬德), a researcher at Sinyi Realty Co (信義房屋), the nation’s only listed brokerage, said commercial properties appear to have emerged from the luxury tax unscathed based on the auction outcome.
“Real-estate investments in commercial properties tend to last longer than three years, freeing them from the luxury levy,” Tseng said by telephone.
The tax, slated to take effect next month, will impose a levy of between 10 percent and 15 percent on properties resold within two years of purchase.
The three buildings, all older than 20 years, may qualify to apply for urban regeneration to boost their worth, Tseng said.
Shin Kong Life, the insurance arm of Shin Kong Financial, appeared the largest beneficiary, as the real-estate trust gained NT$2.13 billion in value, more than double its costs four years ago.
Sunny Hsu (徐舜鋆), senior vice president of Shin Kong Financial, declined to comment on the earnings figures, saying the group will give a detailed account at its investors teleconference this afternoon. Taishin Financial Holdings Co (台新金控) is also a member of Shin Kong Group.