Hanwha REITs "Targets Annual Dividend of 270 Won Per Share"

Hanwha Entrusted Management Real Estate Investment Company (hereinafter Hanwha REITs) stated, "Even after the paid-in capital increase, we will be able to pay an annual dividend of 270 KRW per share," and added, "We improved profitability by lowering loan interest rates by about 1 percentage point through refinancing timed with the market interest rate reduction."

On the 24th, Chae On, Head of the REITs Investment Division at Hanwha Asset Management, revealed this at an investment briefing hosted by the Korea REITs Association, introduced the newly acquired asset, Janggyo-dong Hanwha Building, and presented Hanwha REITs' future growth strategy.

Hanwha REITs recently purchased the Janggyo-dong Hanwha Building in Jung-gu, Seoul, from Hanwha Life Insurance as a new asset. The Janggyo-dong Hanwha Building is a prime office with a total floor area of approximately 25,000 pyeong, located a 2-minute walk from Euljiro 1(il)-ga Station, a core area in downtown Seoul, with a 100% occupancy rate, and is currently used as the headquarters building of Hanwha Group.

Hanwha REITs disclosed the valuation procedures, detailed appraisal reports, and market survey results to demonstrate the appropriateness of the purchase price. The purchase price of the Janggyo-dong Hanwha Building by Hanwha REITs is 808 billion KRW. The price per pyeong is 35.9 million KRW.

The purchase price of the Janggyo-dong Hanwha Building was set at the lower of the two appraisal values received from two appraisal firms. Additionally, after receiving an appropriateness opinion from one external evaluation agency, it underwent review by the Korea Real Estate Board and obtained business approval from the Ministry of Land, Infrastructure and Transport.

According to market research, the transaction prices near the Janggyo-dong Hanwha Building over the past four years ranged from 33.9 million to 41.5 million KRW per pyeong. The most recent building transaction in 2023 had a purchase price of around 37 million KRW per pyeong.

Head Chae stated, "Based on the 'All-in interest rate,' the initial loan interest rate of 5.8% has been reduced to the current 4.8%," and added, "We improved profitability by reducing costs through refinancing timed with the market interest rate decline."

Hanwha REITs recently refinanced existing asset-backed loans worth 327.6 billion KRW under conditions of 'fixed interest rate 4.87% and variable interest rate 3M CD + 1.45%' to lower loan interest rates. The secured loan for new assets worth 421.6 billion KRW was also completed under conditions of 'fixed interest rate 4.65% and variable interest rate 3M CD + 1.25%.'

Additionally, the discount rate for commercial paper issuance is 3.8%. Although Hanwha REITs' credit rating is A+, the secured bond rating backed by collateral is AA-, indicating potential for further improvement in the future.

Based on these profitability improvements, Hanwha REITs set an annual target dividend of 270 KRW per share. Other domestically sponsored listed REITs pay annual dividends in the range of 260 to 280 KRW per share.

Meanwhile, Hanwha REITs currently holds a total of six assets: Janggyo-dong Hanwha Building, Hanwha General Insurance Yeouido Building, and Hanwha Life Insurance buildings in Nowon, Pyeongchon, Jungdong, and Guri. The tenant ratio of Hanwha affiliates accounts for about 77% of the total assets, and with the inclusion of the Janggyo-dong Hanwha Building, the proportion of prime office assets increased to 86% of the total assets.

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