[Click eStock] "Shinhan Alpha REITs, Positive on Yeoksam Building Acquisition"…Target Price Up Up

[Asia Economy Reporter Ji Yeon-jin] Eugene Investment & Securities announced on the 8th that it is raising the target price from the previous 8,000 KRW to 8,500 KRW as Shinhan Alpha REITs acquired the Samsung Fire & Marine Insurance Yeoksam Building and incorporated it as the sixth asset.

The subsidiary of Shinhan Alpha REITs, 'Shinhan Alpha Yeoksam Trust Management Real Estate Investment Company,' disclosed the acquisition of the Samsung Fire & Marine Insurance Yeoksam Building on the 4th and plans to complete the acquisition on the 10th. The purchase price of the Samsung Fire & Marine Insurance Yeoksam Building was 158.3 billion KRW, acquiring shared ownership of part of the 10 floors above ground, floors 11 to 20, and half of the basement levels 1 to 6. With this, Shinhan Alpha REITs incorporated its sixth asset following the acquisition of Shinhan L Tower on September 24 last year.

The acquisition funds for the Yeoksam Building were covered by a senior loan of 102.5 billion KRW on the Yeoksam Building, a bridge loan (subordinated loan of 48.5 billion KRW and VAT loan of 3 billion KRW), and cash held by Shinhan Alpha REITs. Analyst Kim Yeol-mae of Eugene Investment & Securities stated, "Based on past cases of new asset incorporation, it is expected that Shinhan Alpha REITs will repay the subsidiary’s bridge loan through a rights offering, making a rights offering highly likely within the year." He added, "The extent of dividend expansion through this new asset incorporation can be accurately estimated after the rights offering, and there is potential for an upward revision compared to previous estimates."

Shinhan Alpha REITs has continuously incorporated high-quality assets and demonstrated growth through rights offerings. With this new asset incorporation, it now holds a total of six premium office buildings, and the total asset size has exceeded 1.6 trillion KRW. It has succeeded in two rounds of rights offerings since listing, and there is a need for a positive approach when conducting rights offerings for incorporating premium assets.

As of January 31, the overall vacancy rate was 2.1%, with zero vacancy rates at Pangyo Krafton Tower, Yongsan The Prime, and Shinhan L Tower. Dividends are being paid stably at levels exceeding the initially expected dividends at the time of listing, and the estimated dividend yield for this year based on the current stock price is 4.3%. Analyst Kim explained, "The value of Pangyo Krafton Tower, purchased for 518.2 billion KRW, is expected to exceed 700 billion KRW, and the target price was raised reflecting the increase in the value of held assets such as Yongsan The Prime and Da-il Building."

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