Shin Kong Financial Holding Co (新光金控) is to sell one of its 13 buildings in Taipei’s Neihu District (內湖) later this year after the Financial Supervisory Commission (FSC) raised concerns over overconcentration of its real-estate properties in the area, senior executives said yesterday.
“We plan to sell one building that is at least five years old in Neihu later this year and may book the profit by the end of this year,” company spokesman Sunny Hsu (徐舜鋆) told an investors’ conference.
The property divestiture plan follows a warning from the FSC that Shin Kong Life Insurance Co (新光人壽), the flagship unit of Shin Kong Financial, appears to be concentrating its real-estate investment in Neihu, Hsu said.
The concentration gives the impression of property speculation and may spell disaster when property prices in the district drop, the commission said.
Shin Kong Life and Cathay Life Insurance Co (國泰人壽) are the nation’s two largest property investors, with each owning more than 100 commercial properties in prime locations in Taiwan.
Shin Kong Life owns six properties in Taipei’s Xinyi District (信義) that house Shin Kong Mitsukoshi Department Store Co (新光三越), serviced apartments and commercial banks.
“We agree with the regulator and will sell one of the office buildings we have owned for more than five years,” Hsu said.
If the sale proceeds smoothly, Shin Kong Financial may achieve earnings from the divestment by the end of the year, he said.
The conglomerate might channel the proceeds to other investments that generate higher yields, he said, adding that there appear to be more options now that bond yields at home and abroad have risen on the back of the US tapering of quantitative easing measures.
However, Shin Kong Financial will continue efforts to increase property investment and is scouting for potential targets in Taiwan, China, the US and other parts of the world, company president Victor Hsu (許澎) said.
Investing in property overseas is more complicated than Shin Kong initially expected, and the company prefers deals that allow it to have some say in the way the property is managed, Victor Hsu said.
For the first half of the year, Shin Kong Financial posted NT$7.01 billion (US$233.64 million) in net income, down 10.6 percent from last year.
Shin Kong Life first-year premiums plunged 43.5 percent year-on-year during the January-to-June period as a result of higher costs and lower demand, Shin Kong Life president Jason Tsai (蔡雄繼) said.
The insurer will seek to reverse the weak performance by launching savings-linked products in coming months, Tsai said.
Shin Kong Life may benefit from more than NT$6.5 billion in dividend income this year, most of which will be booked in this quarter, Victor Hsu said.
Shares in Shin Kong Financial picked up 1.84 percent to NT$9.98 yesterday, outpacing the TAIEX, which gained 1.19 percent, Taiwan Stock Exchange data showed.