[Click eStock] "Shinhan Alpha REITs, Growth Continues with Additional Asset Incorporation"

[Asia Economy Reporter Eunmo Koo] Eugene Investment & Securities stated that Shinhan Alpha REITs has decided to include Twin City Namsan Office as its fourth asset, and evaluated that it continues to grow through additional asset incorporation and rights offerings. The investment opinion and target price were maintained at ‘Buy’ and 8,000 KRW, respectively.

Shinhan Alpha REITs has decided to incorporate Twin City Namsan Office as its fourth asset. Twin City is located in Yongsan-gu near Seoul Station and consists of one office building and one officetel building. The upper floors of the office building house the Four Points by Sheraton Seoul Namsan hotel, and Shinhan Alpha REITs will acquire the office building from basement level 2 to the 18th floor above ground, excluding the hotel portion. Similar to the acquisition structure of the Daeil Building earlier this year, Shinhan Alpha Namsan Trust Management Real Estate Investment Company, a subsidiary REIT of Shinhan Alpha REITs, will acquire the asset. The purchase price is 238.6 billion KRW, and the scheduled acquisition date is the 26th of this month.

Researcher Kim Yeolmae of Eugene Investment & Securities forecasted in a report on the 21st that additional borrowing was made using existing assets as collateral, and a rights offering is expected in the future. Researcher Kim explained, “At the shareholders’ meeting in June, Shinhan Alpha REITs approved a plan for additional borrowing using existing assets as collateral. Considering the value increase after acquisition, if additional borrowing up to an LTV of 65-70% is made, it was planned that 50 to 100 billion KRW could be additionally borrowed for Pangyo Krafton Tower, and 25 to 50 billion KRW for Yongsan The Prime Tower.” He added, “Subsequently, on July 10, an additional 50 billion KRW (borrowing interest rate 3.1%) was borrowed using Yongsan The Prime Tower as collateral, and it is estimated that part of this was used for the purchase of Twin City Namsan Office.” Shinhan REITs Management and Shinhan Financial Investment participated in the third-party allotment rights offering for Shinhan Alpha Namsan REIT with 2 billion KRW and 18 billion KRW, respectively.

Researcher Kim analyzed, “Judging from the Daeil Building acquisition case, it is expected that in the future, through a rights offering by Shinhan Alpha REITs, part of the mezzanine loan for the subsidiary REIT’s Twin City Namsan acquisition will be repaid, and some common stocks will be reduced through a paid-in capital reduction to expand the subsidiary REIT’s equity ratio up to 100%.” He added, “The extent of dividend increase through this new asset incorporation will be accurately estimable after the financing structure for the purchase is disclosed.”

The investment opinion and target price were maintained at ‘Buy’ and 8,000 KRW, respectively. Researcher Kim forecasted, “Since listing, Shinhan Alpha REITs has successfully conducted two rights offerings and incorporated additional assets, and the value of its holdings has increased after acquisition. The Twin Tower Namsan is also expected to appreciate in value going forward.”

He added, “Shinhan Alpha REITs is considered a leading Korean listed REIT that consistently incorporates high-quality assets and grows through rights offerings. After incorporating Twin City Namsan, there is also a possibility of additionally incorporating Shinhan Life El Tower Peace. Based on the current stock price, the dividend yield for this year is about 4.6%, and there is potential for an increase due to the new asset incorporation,” he analyzed.

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