Study on Accounting of Real Estate Securitization
Date Issued
2004
Date
2004
Author(s)
Wang, Mei-Hsin
DOI
zh-TW
Abstract
As the Legislature Yuan passed the Real Estate Securitization Statue on July 9 of 2003, many trust companies are planning to release new product. By transforming real assets into securities, real estate securitization is created to solve the liquidity problem of real estate investment. The real estate securitization system in Taiwan is divided into two types - Real Estate Investment Trust and Real Estate Asset Trust. In the case of Real Estate Investment Trust, the trust company issues securities over a portfolio of properties to raise from the general public with a view to establishing a Real Estate Investment Trust fund for the purpose of investing in real estate property, related rights, or any other investment as approved by the authority in charge. Where Real Estate Asset Trust is concerned, the beneficiary transfers his title to a real estate property or a right to the trust company; the trust company then issues a security to the beneficiary to entrench his right to the trusted real estate property and its related interests.
Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have not released accounting standards of real estate securitization. There are many writings about securitization of real estate in laws or systems, but not in its accounting problems. The goal of this study is to build accounting rules of real estate securitization to solve relevant accounting problems.
The recommendations of the study are followings：In securitization of real estate：
1、Beneficiary certificates which transfer retains because of credit- enhancement or others reasons are remained asset of transfer. According to this study, these beneficiary certificates are securities, not real estate, to truly achieve the goal of real estate securitization.
2、If transfer holds all of the subordinated beneficiary certificates, transfer shall recognize gain or loss by cost recovery method.
3、What is accounting problems of investors who buy the beneficiary certificates？This study suggests that investors are divided into two groups：passive beneficiary and non-passive beneficiary.
4、Shall the transfer consolidate the special purpose trust(SPT)？An SPT should be consolidated when the substance of the relationship between the transfer and the SPT indicates that the SPT is controlled by the transfer. If the transfer meets four conditions in SIC12「Consolidation-Special Purpose Entities」, released by IASB, the transfer should consolidate SPT, even though it may own little or none of the beneficiary certificates.
Subjects
不動產投資信託
不動產證券化
不動產資產信託
Accounting of transfer
Real Estate Investment Trust
Real Estate Asset Trust
Real Estate Securitization
beneficiary
trustee
Type
other
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