Thu, Jun 07, 2018 - Page 12 News List

REITs expected to invest overseas as regulations ease

Staff writer

Local real-estate investment trusts (REITs) are expected to invest more overseas, as the Financial Supervisory Commission plans to ease regulations, CBRE Group Inc said in a report.

Authorities in March 2016 relaxed rules regarding overseas investments by REITs, but the lengthy approval process continued to stymie activity and no transactions were completed.

The latest measures aim to simplify the process and allow more flexibility, the international property consultancy’s Taiwan branch said.

The amendments to the Real Estate Securitization Act (不動產證券化條例) might go into effect within the next few months and enable REITs to invest in overseas real estate and related rights, including leasehold properties, it said.

REIT activity has been limited since the market was created in 2005, due partly to low yields in the domestic property market. Only three properties worth a total consideration of NT$6.9 billion (US$232 million) have been acquired by local REITs over the past 13 years.

CBRE Taiwan expects deregulation to prompt a select number of REITs to seek investment opportunities overseas, as they promise better returns. Dividend yields offered by Taiwanese REITs average between 2.6 and 3.2 percent.

The total amount of capital REITs can deploy abroad is about NT$19.3 billion, it said.

REITs would be selective when investing overseas, as they might only be able to purchase one asset due to regulatory limits, it said.

They would also face stiff competition from foreign individuals and small and medium-sized property funds, CBRE Taiwan said, adding that it expects local REITs to focus on acquiring office properties with yields of about 4 to 4.5 percent in gateway cities in Europe and North America.

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