Hua Nan Financial Holding Co (華南金控) expects to benefit from rental yields and asset revitalization projects as the bank-focused conglomerate moves its headquarters to Taipei’s Xinyi District (信義) and leases its current headquarters, senior officials said yesterday.
The state-run financial service provider plans to lease 7,500 ping (24,793m2) of office space, which could generate NT$200 million (US$66,551) in rental income a year after it moves to a new building in Xinyi by the end of this year, Hua Nan Financial Holding executive vice president Robert Ting (丁新典) said.
The group is in talks with potential tenants for the lease of two buildings on Chongqing S Road and Kaifeng Street, as well as partial floors at its new site, Ting said.
“The ‘Grade A’ office space of 2,500 ping in Xinyi District might generate NT$3,000 rental income per ping, but we are set to charge less for the existing buildings in Zhongzheng District (中正), given their ‘Grade B’ classification,” Ting said.
Hua Nan Financial prefers a single tenant for the office space in Xinyi, but would “make do if companies have to share the space,” Ting said. In addition, the group is putting the entire building on Kaifeng Street on the rental market, but is to let just six floors of the 10-story office on Chongqing S Road, as the company needs the remaining space, Ting said.
Several foreign and domestic firms have expressed interest; Hua Nan Financial would disclose details after signing the deals, he said.
The expected rental income is less than the additional tax burden of NT$450 million expected for the second half of the year in the wake of the increase in business tax from 2 to 5 percent, which took effect last month, company data showed.
The group’s main subsidiary, Hua Nan Commercial Bank (華南銀行), has a NT$440 million syndicated loan to loss-making Taiwan Polysilicon Corp (福聚太陽能), which could fare worse going forward, like peers on the upstream of the solar-energy supply chain, the bank’s executive vice president York Lai (賴明佑) said.
As of last month, the bank has set aside 53 percent in provisions for the exposure and would raise the ratio later this month if necessary, Lai said.
The polysilicon supplier secured 78 percent of the syndicated loan with capital equipment and the remainder by using its plant as collateral, Lai said.
“It would be difficult to find buyers for the equipment given the sector’s bleak outlook,” Lai said. Hua Nan Financial posted NT$6.31 billion in net income for the first six months, or earnings per share of NT$0.7, according to company data. The figures represent a 21 percent increase from the same period last year.
Taiwan Polysilicon is affiliated with LCY Chemical Corp (李長榮), which is under investigation in relation to gas pipeline blasts in Greater Kaohsiung on July 31 and Aug. 1, killing 30 and injuring than 310.
Additional reporting by staff writer
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