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Feasibility Study on Introducing Special Purpose Company Mechanism into Real Estate Securitization Market in Taiwan
Asset securitization,Real estate securitization,Financial asset securitization,Special purpose trust,Special purpose company,Real estate investment trust,SPC,SPT,REIT,
|Publication Year :||2018|
Today, the real estate securitization market in Taiwan is mainly centered on the Special Purpose Trust (SPT) architecture, where the trust department of banks play a dominant role. The SPT architecture is different from the Special Purpose Company (SPC) specified in the Financial Asset Securitization Act. The Real Estate Securitization Act provides no choice of SPC architecture but stipulates the SPT mode. The Establishment Criteria of Trust Enterprises provides for trust companies specializing in asset trust or real estate investment trust. SPT has so far received scarce attention from investors because of the excessively high capital threshold, severe competition between trust departments of banks, and uncertainty in market prospect.
Real estate securitization involves a variety of complex civil and commercial legal behaviors, such as (1) securities trading behaviors (e.g., public offering and issuing of securities), (2) various debt relations (e.g., buying and selling, leasing, borrowing, contracting, and commissioning) in real estate management, and (3) administrative procedures (e.g., real right registration and tax accounting administration). In Taiwan's trust industry, SPT mostly operates as a sideline to banks. Therefore, it seems that banks will have to bear their decision-making risks as well as their primary business risks and management remunerations. The market expansion of SPT can be considered somewhat inevitably constrained by the rigorous and conservative bank regulatory system.
In fact, real estate securitization markets outside Taiwan are universally based on the SPC architecture. In particular, the equity-based Real Estate Investment Trust (REIT) is adopted mainly because of the elastic and long-term operation of real estate in a corporate form. This study refers to the Financial Asset Securitization Act with the SPC mode and the related development experience of certain advanced countries (such as the USA and Japan). Taking legality, practice, and regulatory compliance into account, this paper studies the feasibility of introducing the SPC mechanism to Taiwan's real estate securitization market.
|Appears in Collections:||事業經營碩士在職學位學程|
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