Dividends Are Sweet... K-REITs Growing in Size

High-Yield REITs Including Hotels and Retail
Attractive Annual Dividends of 5-7% Emerging One After Another

[Asia Economy Reporter Minji Lee] As the returns on domestic risky assets remain sluggish, investors are increasingly interested in publicly offered REITs that provide stable dividends. Recently, large-scale complex REITs incorporating various assets such as hotels, retail, offices, and logistics centers have emerged, making them attractive investment options for investors seeking annual dividends in the 5-7% range.

According to the Korea Exchange on the 2nd, the REITs & Infrastructure Preferred Stock Mixed Index, one of the thematic indices, rose about 2.31% over the past month (October 1 to November 1). This index is composed of 12 stocks selected based on market capitalization among domestic listed REITs and preferred stocks. Considering that the KOSPI fell about 2.9% during the same period, this is interpreted as a relatively favorable return.

By constituent stock, Koramco Energy REIT (8.2%), Lotte REIT (3.07%), and ESR Kendall Square REIT (1.8%) showed upward trends. Other domestic listed REITs also rose, including Modetour REIT (6.45%), K-Top REIT (5.13%), SK REIT (5.6%), D&D Platform (3.23%), and NH Prime REIT (2.27%).

REITs, a representative income-type asset, hold large amounts of real estate assets and are inevitably sensitive to interest rate hikes. This is because rising interest rates increase the debt ratio due to real estate borrowing. However, with the advent of the 'With Corona' era, the profitability of hotel and retail-related assets has improved, and active asset sales and acquisitions have increased dividend yields, leading to growing investor demand. Lee Kyung-ja, a researcher at Samsung Securities, said, “Despite the external environment with significant variables due to interest rate hikes and inflationary pressures, interest in REITs that can pass on costs and provide stable dividends is bound to increase,” adding, “Unlike general companies, REITs are actively acquiring assets with secured collateral assets planned for acquisition, and since these are linked to dividends, companies are confident.”

Recently, large-scale complex REITs have announced plans for listing, which is expected to diversify investors’ choices further. NH All One REIT, Shinhan Seobu TND REIT, and Mirae Asset Global REIT are expected to be listed within this year. Following the successful listings of D&D Platform REIT and SK REIT in August, the number of publicly offered REITs is expected to expand to 18 if these new listings proceed successfully in the domestic stock market.

The REIT expected to list the fastest is NH All One REIT. It incorporates various assets such as A-One Tower Dangsan, A-One Tower Ingye, and Doji Logistics Center, and through synergy with the NongHyup Group, it has pledged an annual dividend of around 7%. It plans to conduct a general public subscription for three days starting from the 3rd and then list on the stock market. Shinhan Seobu TND REIT is expected to see increased value in its main assets, including the Incheon Square One complex shopping mall and the Seoul Dragon City Hotel, as the COVID-19 situation improves. Sponsored by developer Seobu TND, this REIT offers an annual dividend yield in the 6% range. Mirae Asset Global REIT consists mainly of three U.S. logistics centers leased to Amazon and FedEx as its key assets.