Real Estate Investment Trusts in Taiwan
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Real Estate Investment Trusts in Taiwan began with work on the Real Estate Securitization Law in 2002, and it passed July 23, 2003. Businesses or financial institutions can set up trusts to own and operate real estate properties. They can be private or public.
The first one got started in 2004 and was listed on the Taiwan Stock Exchange March 10, 2005.
Legal Requirements for Real Estate Investment Trusts in Taiwan
Minimum initial capital ranges from NT$ 300 million to NT$ 2 billion depending on the scope of their plan.
After funds are raised in the Initial Public Offering, they're used to buy properties with stable incomes from rent. They're prohibited from buying properties without that stable rental income. The trustee, which must be a publicly listed company, can manage the properties or hire an outside management company.
They are in effect closed end funds for real estate investment, because after the IPO they cannot raise funds by selling additional shares.
The REIT must pays out at least 90%et income annually in return for paying no income taxes. REIT shareholders pay the smallest rate of taxes on the dividends, 10%, and that is withheld from the dividend payment. 10% is the rate of taxes the individual investor must pay on the dividends from REITs they receive. This is true no matter what their ordinary marginal tax rate is.
At least 75% of the trust's assets must be in real estate assets. REITs can invest up to 20% of their assets in short term commercial paper, bank deposits, government bonds and such. The trustee may borrow up to 35% of the net value of the trust's assets.
There should be at least 50 unit holders, a unit holder may now own over 50% of the REIT's units unless they are independent professional investors.
There have been no IPOs of REITs in Taiwan for over three years. Late in 2010, investors approved the liquidation of two REITs, the San Tin and Kee Tai Star. This is a poor trend that hopefully will be reversed soon.
Real Estate Investment Trusts in Taiwan:
- FuBon REIT No. 1
- Trident REIT
- Gallop REIT No. 1
- Cathay REIT #1
- Shin Kong REIT #1
- Fubon REIT #2
- Cathay REIT #2
Hopefully Real Estate Investment Trusts in Taiwan will become more popular with investors and with the real estate industry.
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