Koramco Receives AMC Approval... Strengthening REITs Influence

Synergy Expected with Industry-Leading Parent Company
Operational Stability and Value Maximization Possible

[Asia Economy Reporter Kwangho Lee] Coramco Asset Management, a subsidiary of Coramco Asset Trust, announced on the 15th that it has received approval from the Ministry of Land, Infrastructure and Transport as a REIT Asset Management Company (AMC). This is the second REIT AMC approval following Coramco Asset Trust, and it is expected to strengthen the influence of REITs.

Coramco Asset Management is a real estate specialized asset management company established in 2010 by Coramco Asset Trust, a REIT asset management company, to enter the asset management business (real estate funds). It currently manages assets under management (AUM) of approximately 13 trillion KRW.

At the time of establishing ‘Coramco Asset Management,’ REIT asset management companies were not allowed to concurrently operate asset management businesses, so Coramco established a subsidiary to enter the asset management business. Although the Real Estate Investment Company Act was amended in December 2016 to allow concurrent operation of REITs and real estate funds, Coramco’s parent company has continued to focus on REITs and real estate trusts, while the subsidiary has grown primarily in real estate funds.

‘Coramco Asset Trust’ was established in 2001 with the introduction of the REIT system and is recognized for pioneering the domestic real estate finance market after the IMF financial crisis. Currently, including its subsidiaries’ AUM, it manages real estate assets worth a total of 29 trillion KRW, holding about 20% of the domestic private REIT market, making it the overwhelming number one REIT operator. It manages numerous REITs owning landmark buildings in major business districts of Seoul, such as ‘The Asset Gangnam,’ a landmark in Samsung Seocho Town, and ‘Grand Seoul’ in Gwanghwamun, used as the headquarters by GS Construction.

Currently, the domestic REIT market, excluding the public enterprise Korea Land and Housing Corporation (LH), has a total of 37 AMCs managing approximately 63 trillion KRW in assets. Compared to the end of 2020, when 31 asset managers managed 41 trillion KRW, the number of AMCs has increased by 20% and asset size by about 52% in just a year and a half, showing rapid growth.

Supported by the government’s REIT activation policies, some taxes imposed on REITs have been reduced and various regulations abolished, giving the REIT market greater momentum. Accordingly, comprehensive asset management companies such as Hanwha Asset Management and Kiwoom Investment Asset Management, as well as large conglomerate-affiliated asset managers like HDC Asset Management and Woori Asset Trust, are targeting REITs as new growth engines and entering this market one after another.

REITs and funds share the commonality of pooling investors’ money to invest in real estate-related assets, but REITs are based on the Ministry of Land, Infrastructure and Transport’s ‘Real Estate Investment Company Act,’ establishing real estate investment companies and investing in their shares. This differs significantly from real estate funds, which are financial products that distribute beneficiary certificates or equity securities under the Capital Markets Act. Coramco Asset Management is actively promoting development projects recently. It is developing a massive-scale data center in Gasan Digital Complex, Seoul, with an investment of 480 billion KRW, and constructing the largest rental logistics center in the Yeongnam region in Gyeongsan, Gyeongbuk, securing industrial assets expected to see significant asset value appreciation in the future.

Park Hyung-seok, CEO of Coramco Asset Management, said, “We will contribute to the growth of the domestic REIT market through the synergy between the real estate investment know-how accumulated from managing real estate funds and our parent company, the number one REIT operator in Korea.” He added, “Now that Coramco Asset Management has two engines?real estate funds and REITs?we will achieve rapid and solid growth going forward.”

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