Shin Kong Life Insurance Co (新光人壽) on Tuesday won a bid for the China Development Financial Holding Corp (中華開發金控) headquarters with an offer of NT$9.28 billion (US$326.24 million), beating a bid by China Life Insurance Co (中國人壽).
The life insurance arm of Shin Kong Financial Holding Co (新光金控) would use the building — on Nanjing E Road in Taipei’s Songshan District (松山) — as office space for its own use for the first five years, Shin Kong Financial spokesperson Sunny Hsu (徐順鋆) said by telephone yesterday.
The building would accommodate its employees or those of its affiliates, such as Shinkong Insurance Co (新光產險) and Shinkong Synthetic Fibers Corp (新光合成纖維), as those subsidiaries’ buildings are to be rebuilt over the next few years, Hsu said.
Photo courtesy of Cushman & Wakefield Taiwan
“The 35-year-old building is not unsafe or old, but after five years, we would consider rebuilding it via urban renewal and building a new commercial venue to earn stable rental income,” Hsu said.
With the incentives for urban renewal, Shin Kong Life expects to build a 19-story building with a total floor area of 9,700 ping (32,066m2) compared with the current 16-story building’s 8,000 ping, he said.
A preliminary estimate indicates that the new building would generate a higher rate of return than the regulatory minimum, Hsu said.
Shin Kong Life, which owns six buildings along Nanjing W and Nanjing E roads in Datong (大同), Zhongshan (中山) and Songshan districts, expects demand for office space in the area to gain momentum, Hsu said.
The company aims to revitalize its other 190 buildings this year, he said.
It would talk with China Development Financial to decide a timeframe for handing over the building, as its employees still work in the building while the firm’s new headquarters is being finished, he said.
China Development Financial, the parent company of the building’s owner, CDIB Capital Group (中華開發資本), would recognize disposal gains of NT$8 billion from the deal, China Development Financial said in a filing on Tuesday.
“We could not fully recognize the NT$9.28 billion, as we needed to subtract the building’s construction costs from the bid price,” China Development Financial spokesman Richard Chang (張立筌) said by telephone.
It would recognize the disposal gains when receiving the payments, while Shin Kong Life would pay in four installments, Chang said.
The proceeds from the auction would not be used to acquire a greater stake of China Life Insurance via a public tender offer, Chang said, referencing a Financial Supervisory Commission order, adding that they would boost China Development Financial’s return on equity.
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