Study of Real Estate Securitization in Taiwan

• Main Authors: Chen, Cheng Chi, 陳正吉
• Other Authors: Shih-Jen Liao
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/82330944599479726186

碩士 === 樹德科技大學 === 金融保險研究所 === 94 === Real estate securitization means a transfer of the legal relationship between investors and real estate that they invest in from property rights that are directly held by the investors to the real estate into marketable securities that represent economic benefits to the investors. It signifies that real estate is transformed from assets with immobility nature to beneficiary securities with liquidity. The value of the ownership of real estate is subdivided into marketable securities, which means the enormous and uneasily realizable real estate is divided into small units issued via marketable securities to investors. Investors may increase or reduce the units they hold in accordance with their financial portfolio. Meanwhile, through the development, management or disposal of real estate by real estate management institutions or specialized development, the money raised from the capital market is effectively used to develop real estate and to improve the added value of real estate, which adequately integrates the characteristics of the real estate market and capital market to achieve the goal of “To share the benefit of land and to boom money circulation“. As the result of the Asian financial crisis and the migration of traditional industries to Mainland China, the domestic real estate market is constantly sluggish which makes an impact on the development of relevant industries in Taiwan. The financial industry has been deeply impacted in particular. The overdue loan ratio stood as high as 8.16% in 2001. It is then a common goal for the people in Taiwan to active the transaction and to stimulate the recovery of the real estate market. In July 2003 the Legislative Yuan passed the Real Estate Securitization Statute (the “Statute”) in the provisional meeting and Enforcement Rules of the Real Estate Securitization Statute (“Enforcement Rules”) were passed in December of the same year. The real estate securitization has been brought into practice for over two years in Taiwan now. There have been 7 cases of real estate asset trust beneficiary securities and 3 cases of real estate investment trust beneficiary securities approved as of February 2005. This study probes the influence of the legal system and actual operation of Taiwan’s real estate securitization on relevant business owners, investors and financial market. By referring to the experience of the US and Japan the study also gives suggestions on the Statute and Enforcement Rules and discusses the proposal on the securitization of developmental real estate, which is under the approval of the Legislative Yuan. Lastly, the study analyzes the advantages and disadvantages of evaluation, information disclosure, and credit rating after the implementation of real estate securitization and discusses how the supervisory authority should supervise and manage in order to avoid inappropriate transmission of interests by financial holding companies that would bring damages to investors. In conclusion, the study examines the initial stage of operation and aspects of review for the real estate securitization in Taiwan and gives our views and suggestions for the amendment of the Statute which is under the approval of the Legislative Yuan.