The First Urban Regeneration Space Support REIT Officially Launches on the 13th

[Asia Economy Reporter Yoo In-ho] The Space Support Entrusted Management Real Estate Investment Company (No. 1 Space Support REIT), established to improve the profitability of urban regeneration projects and ensure stable settlement of tenants, will officially launch on the 13th.

The Ministry of Land, Infrastructure and Transport completed the business registration for the ‘Seoul Urban Regeneration Space Support REIT’ on this day and will actively proceed with asset acquisitions aimed at improving low-rise residential areas and declining commercial districts in old downtown areas, as well as promoting startups.

The newly launched No. 1 Space Support REIT is a type of Real Estate Investment Trusts (REITs) that collects funds from multiple investors in the form of a corporation and returns profits. Last year, the Ministry of Land amended the Housing and Urban Fund Act to establish a basis for fund support and completed the establishment of the No. 1 Space Support REIT corporation in November of the same year.

The scale of the No. 1 Space Support REIT is a total of 180 billion KRW. The Housing and Urban Fund will finance 64% (115.2 billion KRW) of the total project cost through equity and loans, and the remainder will be covered using capital from public institutions and the private sector. The asset management company (AMC) responsible for managing the assets of the Space Support REIT will be Seoul Investment Management Co., Ltd., an experienced REIT AMC.

Unlike existing urban regeneration development REITs, the No. 1 Space Support REIT plans to purchase housing and commercial properties created through urban regeneration projects and operate them as public rental housing and public rental commercial spaces at prices approximately 10% lower than the surrounding market for about 10 years. According to the Urban Regeneration Act, Urban Maintenance Act, and Small-scale Housing Maintenance Act, rents will be limited to 80-90% of the surrounding market price, with annual rent increases capped at 2.5%.

Accordingly, this will not only enhance the stability of urban regeneration projects that face difficulties due to low profitability or high risk of unsold units but is also expected to play a role in preventing tenant displacement by ensuring their stable settlement.

A Ministry of Land official stated, “The launch of the No. 1 Space Support REIT will diversify urban regeneration project methods and serve as an opportunity to promote urban regeneration,” adding, “We will devise various measures to further activate urban regeneration projects.”

This content was produced with the assistance of AI translation services.