Samsung Securities: "REITs Stock Price Decline Is Excessive... Focus on Growth Potential"

Major Listed REITs' Stock Prices Fell 6% Over the Past Month
Dividend Growth Appeal Increases Through Asset Expansion

[Asia Economy Reporter Minji Lee] Opinions have emerged that attention should be paid to the growth trend of REITs. This is based on the judgment that not only have stock prices fallen by nearly 6% in the past month, increasing dividend yields, but also that dividend growth will continue due to additional asset acquisitions.

According to Samsung Securities on the 18th, the stock prices of major listed REITs have fallen by an average of about 6% over the past month. This is interpreted as reflecting the impact of offline activities coming to a halt after the COVID-19 pandemic. In the domestic stock market, IPO stock prices of new industries such as bio and secondary batteries surged, causing market liquidity to flow into these industries, and interest in income-type products like REITs relatively declined.

Seoul Taepyeong-ro Building currently held as the underlying asset by Aegis Value Plus REIT.

Researcher Kyungja Lee of Samsung Securities said, “Global REITs with various sub-sectors are showing a polarization phenomenon where stock prices of digital real estate-related REITs such as data centers and cell towers are rising,” adding, “Abundant liquidity is concentrated only in new industries and high-risk business groups.”

Due to the recent sluggish stock prices of listed REITs, the annualized dividend yields of five major stocks (Shinhan Alpha REITs, IREITs Corelab, Lotte Prime REITs, NH Prime REITs, and Aegis Value Plus) have risen from the 5% range at the beginning of the year to 6.1% currently. This means they have returned to the dividend yields presented at the time of listing.

The possibility of a dividend cut, which has recently been raised, appears to be slim. Unlike the U.S. (with a dividend payout ratio of 70%), Korean REITs distribute 90% of distributable earnings as dividends. Researcher Kyungja Lee emphasized, “In fact, there has been no REIT that has cut dividends so far,” and added, “The anchor tenants or the financial health of the underlying assets responsible for paying rent are also relatively strong, so the recent stock price decline is excessive.”

Attention should also be paid to additional asset acquisitions by major REITs. Recently, Shinhan Alpha REITs and Lotte REITs are considering additional asset acquisitions. Dividend growth through asset expansion is an important investment point. In particular, Shinhan Alpha REITs is promoting the acquisition of two assets without a rights offering by expanding borrowing capacity due to the increase in existing asset values. Lotte REITs is considering acquiring various assets such as logistics centers in addition to stores.

Researcher Kyungja Lee explained, “Since about 10 REITs will be listed this year, investment considering such growth potential is necessary.”

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