'Daerich' Appears After 2 Years... "Rising Wave of REITs IPOs, Big Market Ahead"

'Asset Size Nearing 2 Trillion' SK REITs "Debuting on KOSPI in September as a Giant REIT"
Second Half REITs Battle "Sequential Listings"... This Year Marks the Evolution of 'K-REITs'

SK REITs (SK Entrusted Management Real Estate Investment Company) will enter the KOSPI market next month. On the 18th, the SK Group headquarters located in Jongno-gu, SK Seorin Building. Photo by Moon Honam munonam@

[Asia Economy reporters Lee Seon-ae and Lee Min-ji] Following Lotte REITs, a large conglomerate REITs (Real Estate Investment Trusts) is set to emerge after two years. The protagonist is SK REITs (SK Trustee Management Real Estate Investment Company), with assets nearing 2 trillion KRW. The appearance of a 'giant REITs (market capitalization over 1 trillion KRW)' following Lotte REITs and ESR Kendall Square REITs is expected to revitalize the REITs market.

According to the Korea Exchange on the 18th, SK REITs will conduct a demand forecast targeting domestic and foreign institutional investors over two days from the 23rd to 24th, followed by a public subscription for general investors over three days from August 30 to September 1, and will be listed on the KOSPI market in September. Unlike other listed REITs that pay dividends once or twice a year, SK REITs is attracting attention as the first quarterly dividend REIT in Korea. Its assets consist of the SK Seorin Building (purchase price 1.003 trillion KRW) and 116 SK gas stations (purchase price 765.4 billion KRW), making it a truly mega and top-tier REITs.

The successful stock market debut of SK REITs is expected to become a driving force for future conglomerate REITs listings. This is because conglomerates can use REITs to liquidate real estate assets in the market and raise growth capital, rather than holding onto them. In fact, Lotte Group, which listed Lotte REITs two years ago, has actively invested in new businesses using the funds raised through securitization. SK REITs is also expected to emerge as a key company that can supply liquidity needed for SK Group's new business investments (secondary batteries and energy, ICT & mobility, semiconductors, eco-friendly businesses, pharmaceuticals & bio, etc.). Park Sera, a researcher at Shin Young Securities, said, "SK REITs will become a key company that can supply liquidity necessary for SK Group's new business investments," adding, "Various asset incorporations will be made for this purpose."

Accordingly, in addition to the SK Seorin Building worth about 1 trillion KRW and 100% stake in Clean Energy REITs (land and buildings of 116 gas stations nationwide), which are SK REITs' incorporated assets, further asset incorporations and securitization are expected. SK REITs holds a right of first refusal for key real estate assets owned by SK Group, and cumulative assets of about 4 trillion KRW are expected to be incorporated by 2024. Shin Do-cheol, CEO of SK REITs, explained, "We will continuously incorporate assets linked to SK Group's core businesses such as data centers, new energy, logistics centers, and overseas assets to grow into a REITs worth 10 trillion KRW."

Investor interest in listed REITs is gradually increasing. Recently, foreign and institutional investors have been actively buying Lotte REITs, ESR Kendall Square REITs, JR Global REITs, K-Top REITs, and Shinhan Alpha REITs. Notably, although foreigners have continuously sold more than they bought in the domestic stock market, they have held tightly onto REITs. Institutions have taken the same position. Since May 27, the national pension fund has not sold a single share of Lotte REITs, the largest REITs by size, and has only been buying up to the market close on the 17th.

Given this situation, individual investors' attention is also turning to REITs. The stable appeal of REITs is further highlighted amid increased stock market volatility. The biggest attraction of REITs is stable dividends. Dividends are regularly paid to shareholders based on income generated from underlying real estate assets. According to the Ministry of Land, Infrastructure and Transport, the dividend yield of 13 REITs listed on the domestic stock market last year was 7.13%.

A REITs battle is expected in the second half of the year. Ahead of SK REITs, D&D Platform REITs will be listed on the KOSPI market on the 27th. The public subscription competition rate for general investors of D&D Platform REITs, which completed its IPO on the 9th, was 36.43 to 1, the highest among REITs listed since last year. In addition, Shinhan Seobu T&D REITs, Mirae Asset Global REITs, NH All One REITs, and Marston Premier No.1 REITs are also preparing for listing.

Lee Kyung-ja, a researcher at Samsung Securities, said, "This year is the evolution period for 'K-REITs,'" adding, "Assuming new listings of 2 to 3 trillion KRW annually and rights offerings equivalent to 10% of market capitalization, REITs will account for 1% of the KOSPI market as early as 2023." Considering that REITs account for 2% of the stock markets in the U.S. and Japan, where the REITs market is most developed, rapid growth is anticipated.

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