Elitegroup Computer Systems Co (精英電腦), a major PC motherboard maker, said in a stock exchange filing yesterday it was still in talks with potential buyers for its headquarters building after an aborted auction drove its shares down by their daily limit a day earlier.
The Taipei-based company posted the filing before the stock market opened, but its shares dipped another 2.27 percent to NT$12.90 yesterday, weaker than the nearly flat TAIEX, thanks to media reports saying its “overpriced” office building in Neihu District (內湖) scared prospective buyers away.
“Reports that no one tendered a bid due to overpricing are inaccurate,” the filing said.
The company is negotiating terms with interested parties, but cannot supply details before the discussions are settled as required by disclosure rules, the filing said.
At issue is an office building — with 20 stories aboveground and four basement floors — that Elitegroup had intended to auction off on Monday, but bidding organizer Jones Lang LaSalle Taiwan said potential buyers needed more time to sort out details in private.
The building has a total floor space of 16,000 ping (52,893m2) sitting on a plot of land measuring 1,595.97 ping. It reportedly has an asking price of NT$7 billion (US$235.22 million), squeezing the room for buyers, especially in the life insurance industry, to meet the 2.875 percent minimum yield requirement, local reports said.
Elitegroup would respect the property consultancy in dealing with the building, the filing said.
The company has indicated it would lease the building from the winning bidder for years, providing an additional incentive for the property transaction.
However, property analysts said Elitegroup would have to lower the floor price or raise planned rental rates to make the deal more attractive to life insurers, as few buyers in other sectors have deep enough pockets.
Jones Lang LaSalle Taiwan managing director Tony Chao (趙正義) said prospective buyers have yet to come to terms with Elitegroup over the leasing terms, but they may reach an agreement by the end of the year.
Still, the twist sent a warning signal to the commercial property market, which had anticipated a rebound this quarter after a listless showing for the past three quarters.
On Friday, Taiwan Fertilizer Corp (台肥) failed to auction off a 70-year superficies rights for its plot of land in Taipei’s Nangang District (南港).
Earlier last week, CTBC Financial Holding Co (中信金控) extended the deadline for selling its headquarters building in the prime Xinyi District (信義) from Nov. 5 to February, saying potential buyers need more time to evaluate the property.
All three sellers set complicated bidding terms for their properties, driving buyers to be cautious, CBRE Taiwan said.
CTBC Financial has said it would sell only 95 percent of the office building and may call off the auction without any compensation, if necessary.