LH Launches Public REIT Offering to the Nation

Housing Development REITs Structure Diagram (Provided by LH)

[Asia Economy Reporter Chunhee Lee] Korea Land and Housing Corporation (LH) is launching a public offering for a national housing development REITs (Real Estate Investment Trusts).

On the 14th, LH announced that it will conduct a preferred stock public offering for the Gimpo Masong Paju Unjeong 3 Housing Development REIT, whose asset management it is currently handling.

The offering targets approximately 450,000 shares, about 30% of the total 1.51 million issued shares (worth 15.6 billion KRW). These are unlisted preferred stocks aiming for an annual dividend yield of 5.3%.

The offering is divided into Type 1 (378,571 shares) and Type 2 (75,715 shares), both issued at a price of 34,340 KRW per share with a face value of 5,000 KRW. As preferred stocks, they carry no voting rights. Type 1 can be subscribed to by any citizen with a minimum subscription amount of about 1 million KRW (30 shares or more). Type 2 requires a minimum subscription unit of 1,000 shares or more, amounting to 34.34 million KRW.

This housing development REIT project proceeds with LH selecting a private consortium to establish the REIT through a private business operator public offering, then selling housing construction land to the REIT. The REIT constructs and sells apartment complexes and distributes dividends and liquidation proceeds from the sales.

LH minimizes the risk of unsold housing by entrusting and managing the REIT’s asset operations and providing purchase commitments. Private construction companies handle construction and sales, receiving performance-based construction fees for profits exceeding the target returns.

Perspective view of 'e-Pyeonhansesang Unjeong Urban Prime' in Paju Unjeong 3 A-27 Block, Gyeonggi (Provided by LH)

Since its establishment in April 2018, the Gimpo Masong Paju Unjeong 3 Housing Development REIT has completed all types of sales contracts last August with competition rates of 1.5:1 and 2.2:1 for apartments in Gimpo Masong B-6 Block (e-Pyeonhansesang Gimpo Royal Heim, 574 units) and Paju Unjeong 3 A-27 Block (e-Pyeonhansesang Unjeong Urban Prime, 1,010 units), respectively.

Currently, under the responsibility completion guarantee of the construction company Daelim Industrial and LH’s purchase commitment, the housing construction and payment procedures for sales proceeds are underway, with the project aiming for dividend distribution and liquidation by June 2022.

The public offering schedule starts with a subscription notice on the 26th, followed by subscription acceptance from the 28th to the 30th. Detailed information can be found on the REIT information system website, Cape Investment & Securities website, and the electronic disclosure system.

Earlier in January, LH also conducted a public offering for shares (about 8.4 billion KRW) of the Goyang Samsong Xi The Village Housing Development REIT. LH plans to continue efforts to revitalize the REIT market and foster a sound culture of indirect real estate investment.

An LH official stated, "Through the REIT stock public offering, we aim to provide an opportunity for any citizen to indirectly invest in real estate with a small amount. We expect investors to realize stable returns through responsibility completion guarantees, purchase commitments, and dividend agreements on target yields."

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