[Asia Economy Reporter Minji Lee] “The offices that Aegis Value Plus REIT invests in are stable assets that have been less affected by COVID-19. With expertise and know-how in real estate investment, we will increase office building assets and grow steadily.”
On the 5th, at the Aegis Value Plus REIT press conference (IPO) held at Conrad Hotel in Yeouido, Seoul, Jung Seok-woo, CEO of Aegis Asset Management, made these remarks.
On the 5th, at the Aegis Value Plus REITs press conference (IPO) held at the Conrad Hotel in Yeouido, Seoul, Jung Seok-woo, CEO of Aegis Asset Management, stated, "The expected yield of the REITs due to the inclusion of office building assets is around 6.6% per year."
The core of REIT investment lies in the location of the assets and whether solid tenants have been secured. The structure of Aegis Value Plus REIT is to raise equity capital through this public offering and then purchase the beneficiary certificates of ‘Aegis No.97,’ which owns the ‘Taepyeong-ro Building.’
The Taepyeong-ro Building is located in the City Hall Station CBD (Central Business District), preferred by large corporations and financial companies. There are a total of 19 tenants, including Samsung Life Insurance, CJ Logistics, Industrial and Commercial Bank of China (ICBC), and Boram Sangjo. Prime tenants occupy 65% of the leased area, and as of the end of April, the vacancy rate based on contracts is about 5.6%. The remaining lease period for tenants is approximately 2.3 years.
CEO Jung said, “When a lease expires, if there is a single tenant, there is a risk of large-scale vacancy. However, if there are various tenants and the lease expirations are staggered, the risk of large vacancies is low, making it suitable for public REITs.”
The purchase price of this building is about 25 million KRW per pyeong, which is relatively inexpensive compared to other CBD buildings nearby. The company plans to additionally incorporate real estate funds or REITs holding ‘prime office buildings’ through further capital increases. A company official said, “Currently, we are considering asset incorporation mainly in the Gangnam area CBD,” and added, “We will focus on office buildings to grow the REIT to over a trillion KRW.” The expected annual yield of the REIT from asset incorporation is about 6.6%, with total dividends around 3.6 billion KRW.
Aegis Asset Management, which manages this REIT, currently ranks first in domestic real estate fund setup amount and third worldwide in terms of Asian real estate assets under management. The company has invested not only in traditional commercial real estate such as offices and hotels but also in logistics and residential sectors. As of the end of last year, it manages and invests in 207 real estate assets, approximately 2.7 million pyeong, based on physical and development assets under management.
CEO Jung stated, “Over the past five years, the average annual dividend yield of the domestic physical assets managed by the company is about 6.16%. This is approximately 4 percentage points higher on average than stock dividend yields, bonds, retirement pensions, and bank deposit yields.”
Shin Won-jung, Executive Director of Samsung Securities IB Division and lead underwriter who attended the event, emphasized, “As stock market volatility is expected to increase further, investors seeking stability have limited options. Aegis Value Plus REIT will fulfill that role.”
Meanwhile, the total number of shares offered by Aegis Value Plus REIT is 23.7 million shares, with a fixed public offering price of 5,000 KRW per share. The total expected amount is 118.5 billion KRW. Demand forecasting for institutional investors will be conducted over two days from the 10th to the 11th, followed by public subscription from institutional and general investors on the 16th and 17th.
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