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More Korean REIT debuts garner investor attention

Nov. 15, 2021 - 16:28 By Son Ji-hyoung
An aerial view of Grand Mercure Ambassador Hotel and Residences Seoul Yongsan (Courtesy of Shinhan Seobu D&T REIT)
South Korea is poised to welcome a series of listings of real estate investment trusts by the end of this year, with their underlying assets increasingly diversifying, filings showed Monday.

A REIT refers to a vehicle designed to offer dividend returns to its investors through incomes from securitized real estate assets, largely perceived as a risk-averse strategy.

Seeing stronger investor demand for public REIT stocks this year, Korea will move onward to welcome at least three new REITs before the end of this year.

Starting Thursday, NH All One REITs, a multisector REIT with exposure to office buildings and a logistics center, will begin trading on the Korea Exchange’s main bourse Kospi, weeks after the vehicle completed a 140.5 billion won ($119 million) fundraising as it went public.

The REIT’s book building was 628.2 times oversubscribed by institutional investors, the most competitive in Korean capital market history. Its IPO was 453 times oversubscribed by retail investors, which was second to the SK conglomerate-backed SK REIT that debuted in September.

As a result, the multisector REIT will be overseeing 516.4 billion won worth of commercial real assets -- including offices in Gyeonggi Province, an office in western Seoul and a warehouse in Icheon, Gyeonggi Province. The vehicle is managed by NongHyup REITs Management, a wholly owned arm of NH Financial Group.

Following the news, Korea has set sights on two more REIT listings in early December, followed by initial public offerings in late November. These are Shinhan Seobu T&D REIT and overseas logistics-focused Mirae Asset Global REIT.

Shinhan Seobu T&D REIT looks to raise 134.9 billion won to back its investment in assets, including Grand Mercure Ambassador Hotel and Residences Seoul Yongsan. The REIT, backed by domestic developer Seobu T&D, already owns shopping complex Square One, located in southwestern Incheon.

Mirae Asset Global REIT, on the other hand, will raise 75.1 billion won in IPO to indirectly control a US FedEx Ground logistics center in Indianapolis, Indiana. The vehicle already owns a FedEx Ground warehouse in Tampa, Florida, and an Amazon logistics facility in Houston, Texas.

Their debut comes as public Korean REITs have enjoyed a bumper year so far.

As of Friday, Korea’s 15 public REITs saw their combined market cap reach 6.4 trillion won, or 0.3 percent of the national gross domestic product.

Korea earlier welcomed newcomers D&D Platform REIT in August and SK REIT in September. The two REITs’ market cap stood at a combined 1.3 trillion won as of Friday.

With three more REITs going public later this year, Korea is expected to be home to 18 public REITs by the end of this year.

Korea’s public REITs portfolio includes offices, logistics centers, apartment complexes, hotels, retail buildings and gas stations as underlying assets.