Investment in Brussels Finance Tower, Belgium
Stable Rental Income Expected with Key Ministries like Ministry of Finance and Ministry of Welfare Occupying
[Asia Economy Reporter Minwoo Lee] JR Global REITs, the first publicly offered real estate investment trust (REITs) in Korea investing in overseas real estate, is set to be listed on the KOSPI market in early next month. It is explained that investors can enjoy an average dividend yield of 8% over the long term through buildings occupied by Belgian government agencies such as the Ministry of Finance and the Ministry of Welfare.
On the 14th, JR Global REITs held an initial public offering (IPO) press conference at a hotel in Yeouido, Seoul, announcing its listing plan. The product invests in the 'Finance Tower Complex (Finance Tower)' located in Brussels, Belgium, which was invested in by JR No. 26 Entrusted Management Real Estate Investment Company. The parent REIT, JR Global REITs, invests the public offering funds in the shares of the subsidiary REIT, JR No. 26 REITs, which in turn invests in overseas real estate. JR Global REITs has obtained the first business approval in Korea from the Ministry of Land, Infrastructure and Transport for a public REIT based on overseas real estate assets.
The company emphasized the stability of the investment target. Since the underlying assets are high-quality and the tenants are government agencies, it is expected to generate stable rental income and consequently high dividend yields. The Finance Tower is a building with a total floor area of 195,973 square meters located in the central business district (CBD) of Brussels, Belgium, with an asset appraisal value of 1.44 billion euros (approximately 1.97 trillion KRW). The building management agency, a Belgian federal government-affiliated institution rated AA by S&P, is the tenant, and major ministries such as the Ministry of Finance, Ministry of Welfare, and Ministry of Food Safety currently occupy the building. The entire building area is leased long-term without early termination options until December 2034, with annual rent reaching about 80 billion KRW as of this year. The rent increase rate is adjusted annually based on the Belgian Health Index.
Kim Kwan-young, CEO of JR Investment Management, explained, "Regarding tenant acquisition, which is the biggest concern for overseas real estate assets, this is the most stable case," adding, "Based on stable rental income, we aim for an average dividend yield of around 8% over seven years."
The total number of publicly offered shares is 97 million. The public offering price per share is set at a single price of 5,000 KRW, making the total public offering amount 485 billion KRW. Including 343 billion KRW raised through pre-listing equity investments, the total amount raised is 828 billion KRW. JR Global REITs will conduct demand forecasting targeting domestic and foreign institutional investors on the 16th and 17th, followed by subscription for general investors from the 22nd to the 24th. The listing is scheduled for early next month. The joint lead managers are KB Securities and Meritz Securities, with Daishin Securities as the underwriter.
Notably, a priority allocation plan for small investors will be introduced in this subscription to increase participation opportunities for small investors. Of the 48 million shares (240 billion KRW) allocated to general investors, half?24 million shares (120 billion KRW)?will be allocated as priority shares for small investors, prioritizing subscription amounts of 1 million KRW or less among general subscribers.
However, the small investor priority allocation will only be conducted within the limits of the small investor priority allocation quota per underwriting company. If the allocation quota is exhausted, even those who subscribed with amounts of 1 million KRW or less may receive fewer shares than their subscription amount. Subsequently, the remaining shares from the small investor priority allocation and the competitive allocation shares (24 million shares) will be allocated proportionally based on subscription amounts as usual.
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