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Taiwan spawns its first REAT

Published 2 Min Read

Societe Generale and Industrial Bank of Taiwan (IBT) are busy putting the final touches on what will be the first real estate asset trust (REAT) launched under the Real Estate Securitization Law.

The NT$2.13 billion (US$63.5 million) transaction involves the sale into a REAT by Chia Hsin International, a Taiwanese property conglomerate, of its stake in the IBM Building, located in the heart of Taipei’s central business district. As well as ownership, Chia Hsin has acted as property and leasing manager on the building for the past 17 years, roles it will continue to fulfill during the life of the eight-year transaction.

At closing, the company will receive issuance proceeds from the deal, which has been split into NT$1.63 billion of Aaa’ trust beneficiary certificates, rated by Moody’s Investors Service, and NT$0.5 billion of A3′-rated certificates. Investors will be repaid by rental payments, as well as having part-ownership in the building.

SG’s and IBT’s involvement as arrangers further cements a relationship that began in September 2001 when they signed a cooperation agreement on developing Taiwan’s securitization market. The two banks also completed Taiwan’s first ABS deal in January 2003, a NT$3.65 billion collateralized loan obligation.

Also in Taiwan, Jih Sun Bank’s $150 million cross-border auto loans deal via HVB is set for launch at the end of July, a well-placed source confirmed to ASR. The source added that rating agencies have completed due diligence and that Deutsche Bank has been appointed trustee and back-up servicer. The transaction will have a five-year final and expected maturity of three years, and it will be backed exclusively by auto loans.

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