| Summary: | 碩士 === 東吳大學 === 企業管理學系 === 98 === The major legal basis for Real Estate Securitization in Taiwan is the "Real Estate Securitization Act" (here after “The Act”). The two key architectures defined by The Act are "Real Estate Asset Trust" (REAT) and "Real Estate Investment Trust" (REIT). Since The Act has been implemented on July 2003, there are 9 successful REAT beneficiaries issued and 8 files listed REIT beneficiary securities traded. This study is based on the two types of trust beneficiary, and further extends the exploration of them.
This study can be divided into three parts. The first part is to clarify the difference between REAT and REIT. The second part discusses the detail of both types of trust. The third part will explore, from an financial point of view, the valuation/evaluation concept on the two types of trust beneficiaries.
The results show that, in terms of product design, REAT beneficial securities are designed from a similar concept to the balance sheet’s "liabilities", while REIT is designed based on the concept of "owners’ equity". Therefore, REAT can be classified as a fixed-income security. During the period of holding a REAT, investors can only receive a fixed interest payment, and receive back the principal amount invested at maturity. On the other hand, REIT is an equity security. Although commercial real estate returns are stable compared with other investment vehicles, REIT beneficiary is not a fixed income security. In addition, a REIT beneficiary security has no expiration date. If investors demand for funds, they sell REIT security in the open market to get funds back, but will bear the risk of volatility of market price.
In order to achieve the expected stable installment of REAT, investors of REAT will evaluate credit of trustor as well as both internal and external credit enhancements to ensure the fulfillment of expected return. On the other hand, the REIT investment is to earn higher returns (than REAT), and enjoy the benefits brought by gain on property value. So when performing assessment on REIT, investors will pay much attend on the future profitability of target real estate, and the operating ability of the REAT management team. However, as Taiwan's REIT beneficiary securities traded below their net worth for a long period of time, it is recommended that Government departments should try to strengthen the liquidation of REIT by building up a “fund liquidation exit mechanism”. The purpose is to make the investment at a reasonable price in the market transaction, then to develop a healthy market.
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