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Cross-border REIT listings to heat up Korea’s IPO market

Finance Tower Complex in Belgium (left) and Crystal Park in Paris
Finance Tower Complex in Belgium (left) and Crystal Park in Paris
A series of listings of Korean real estate investment trusts -- including ones that involve investments in foreign properties -- are adding vigor to the upbeat initial public offering scene in the local stock market.

This comes as investment houses here are moving to attract stable cash streams by luring investors to their own vehicles used to buy properties at home and abroad.

In the latest move, JR Asset Management on Wednesday released a prospectus for its REIT ahead of the flotation plan to raise 485 billion won ($406 million) to acquire Finance Tower Complex in Belgium’s central business district. The news came after the REIT earned the green light from the Land Ministry here in February.

Real estate investment trusts refer to companies designed to generate income through annual dividend returns from securitized real estate to its investors.

JR Global intends to collect retail investors’ money on the nation’s main bourse Kospi and use it to buy securities of its private REIT, JR Fund 26.

In addition to JR Global’s pre-IPO proceeds worth 343 billion won, JR Global is expected to back what was used to buy Belgium’s second-tallest building with over 195,900 square meters of floor space. The Belgian Buildings Agency is its key tenant. The real estate asset is valued at 1.44 billion euros ($1.62 billion).

JR Asset said the JR Fund 26 will add more prime properties in Europe to its portfolio by 2022 and diversify that portfolio with the investment in the US starting 2025, the prospectus showed.

The IPO is poised to take place on July 16-17 targeting institutional investors, and July 22-24 for retail investors, ahead of a Kospi listing in early August. KB Securities and Meritz Securities are lead underwriters.

Following the deal, Korea’s properties investment powerhouse Mastern Investment Management plans to raise 111.5 billion won from stock investors to Mastern’s vehicle used to purchase equities in the Crystal Park office building in Paris. Mastern had purchased 373.9 billion won of equity from the previous stakeholder Samsung Securities via the vehicle. Mastern is expected to skip the pre-IPO stage ahead of the Kospi listing.

The deals come along with the listing attempts of REITs associated with Korean properties in the second half of 2020.

Mirae Asset Global Investments on Wednesday launched a two-day institutional tranche for its REIT that targets Gwanggyo Central Prugio City -- a commercial space of the commercial-residential complex in the planned city of Gwanggyo, located some 25 kilometers south of Seoul in Gyeonggi Province. After the retail tranche the following week, the REIT is poised to be listed on the Kospi market in August.

Igis Asset Management, Korea’s largest properties investment house which oversees some 15 trillion won of assets, is looking to list two REITs -- respectively investing in public rental housing units and in an Igis vehicle used to acquire the Taepyeongno Building in the central business district in Seoul.

In the meantime, Korean public REITs are looking to tap into outbound deals to diversify their portfolios. Trading on the Kospi bourse since December, NH Prime REIT in June approved a plan to add landmark buildings such as 195 Broadway in New York and Tour Eqho in Paris to its portfolio of Korean assets.

Korea is home to seven listed REITs, four of which went public in 2018 and 2019.

By Son Ji-hyoung (consnow@heraldcorp.com)
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