Fubon Financial successfully launches Taiwan's first real estate investment trust

March 1, 2005

Fubon Financial Holding Co. has successfully launched Taiwan's first real estate investment trust, Fubon No. 1 REIT. In the four days following its public offering on February 14, the trust attracted funds of nearly NTD 30 billion. This is five times the value of the three Fubon-owned properties, valued at NTD 5.83 billion, held by the trust.

An REIT is a security that sells like a stock. Trust managers buy and manage real estate property or mortgages using money invested by shareholders.

This is the first such security to be offered since the recent promulgation of Taiwan's Real Estate Securitization Act. It is hoped this act will boost investment in the real estate market and provide investors in Taiwan with a greater variety of investment options. For example, REITs mean individual investors can invest in real estate without having to buy entire buildings and take care of their properties personally.

With individual investors accounting for 60% of the funds invested in the Fubon No. 1 REIT, this type of fund is seen as having great potential as an alternative investment vehicle for individual investors. Most of these small investors put up NTD 1.5 million to NTD 3 million, though some invested over NTD 10 million.

Among the trust's institutional investors, domestic banks, securities firms, and life and property insurers invested a combined NTD 3 billion. Foreign institutional investors and domestic enterprises invested more than NTD 1 billion as well.

Shareholders in Fubon No. 1 REIT will enjoy tax breaks and receive annual dividends at a fixed rate of between 3.5% and 4%. Dividends for the first year of the trust will be issued at 3.85%. These fixed dividends have proved very attractive to investors. Fubon Financial has adopted a policy of issuing all surplus earnings from the trust as dividends. That is, after paying trust fees to the Land Bank of Taiwan and covering the building management expenses of Fubon Construction Management Co, the property manager of the transaction, all extra profits will go to investors as dividends. Shares in the trust may also be sold on the over-the-counter stock market.

Moody's Taiwan has announced a stable outlook for the Fubon No. 1 REIT. Fubon Financial, Taiwan's second-largest financial services company, intends to offer as many as five REIT in the future.

(United Daily News)

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