Koramco, Administrative Mutual Aid Association Preferred Stock Blind REIT Investment

Simultaneous Investment in Samsung SDS Tower and Hana Financial Group Gangnam Office
Expected to Grow as Korea's First Secondary Investment Platform

Koramco Asset Trust announced on the 3rd that through the 150 billion KRW blind REIT ‘Koramco Office Preferred Stock No.1 REIT,’ in which the Administrative Mutual Aid Association invested, it invested 20 billion KRW each in preferred stocks of Samsung SDS Tower and Hana Financial Gangnam Building, totaling 40 billion KRW.

Koramco Preferred Stock Blind is a blind REIT operated by Koramco Asset Trust’s Investment Funding Office, which received entrusted funds from the Administrative Mutual Aid Association in July. It is the first in Korea to employ a secondary strategy.

Secondary investment in the commercial real estate market is a strategy where institutional investors such as pension funds, mutual aid associations, and financial institutions acquire shares of REITs or funds they previously invested in. The emergence of this strategy signifies that the domestic indirect real estate investment market has entered a mature stage.

Koramco Preferred Stock Blind invests in preferred stocks that have priority rights to dividends and principal repayment among REIT shares or fund beneficiary certificates. Additionally, it limits investment targets to prime offices located in Seoul’s core business districts to strengthen cash flow stability. The investments in Samsung SDS Tower and Hana Financial Gangnam Building also focused on pursuing stable cash flows.

Koramco Asset Trust swiftly proceeded from the selection of the Administrative Mutual Aid Association’s entrusted operator to the establishment and approval (registration) of the REIT, and then to the first investment within about two months. This rapid investment was made possible thanks to the ‘Rationalization of Blind REIT Operation Regulations’ in the REIT activation plan announced by the Ministry of Land, Infrastructure and Transport in June.

Blind REITs invested in by pension funds and mutual aid associations only need to register ‘investment guidelines’ with the Ministry of Land, Infrastructure and Transport upon approval. If the investment target meets the guidelines, investment decisions can be made at the REIT’s general shareholders’ meeting without additional approval procedures. The removal of unnecessary intermediate steps allows operators to make swift decisions.

Market expectations for the preferred stock blind are also high. This is because a new channel has emerged that provides liquidity to the commercial real estate market, where large amounts of investment funds are inevitably locked in due to long-term investments. It is expected to offer exit opportunities not only to financial institutions such as banks, insurance companies, and specialized credit finance companies, which face strengthened capital regulations, but also to professional investors urgently needing liquidity and securities firms that need to reduce principal investment (PI).

Na Gil-woong, head of the investment funding team and a key REIT operator, said, “Recently, inquiries have increased from many financial companies holding office preferred stocks asking whether Koramco Preferred Stock Blind can purchase their preferred stocks.” He added, “We will quickly proceed with follow-up investments within this year for institutions facing liquidity difficulties or needing to adjust their investment portfolios.”

He also emphasized, “We will establish ourselves as a continuous secondary platform targeting preferred stocks of prime offices within Seoul’s core areas to provide useful exit strategies to market participants.”

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