Shinhan Seobu TND REITs "A Stable and Growth-Oriented Hybrid REIT... Confident in Annual Dividends Around 6%"

KOSPI Listings Scheduled for December
5-Year Average Dividend Yield 6.25%
Balanced Hybrid REITs with Stability and Growth
SeobutienDi Plans to Add Logistics Centers, Housing Assets

[Asia Economy Reporter Minji Lee] “Shinhan Seobu TND REIT is a complex REIT with high potential for growth. We will develop it into a major large-scale complex REIT in Korea through a successful listing.”

On the 9th, Namgung Hoon, CEO of Shinhan REITs Management, made these remarks at a press conference for Shinhan Seobu TND REIT held at Yongsan Dragon City. Shinhan Seobu TND REIT is the second REIT launched by Shinhan REITs Management following Shinhan Alpha REIT. This REIT is a ‘developer-type complex anchor REIT’ that includes assets owned by the real estate development company Seobu TND, incorporating shopping malls, hotels, and more.

Key assets of Shinhan Seobu TND include Incheon Square One and subsidiary REIT equity securities. Incheon Square One is a representative large-scale complex shopping mall in the southwestern region of Incheon. Yeonsu-gu, Incheon, is a major metropolitan area with a population of 390,000, and due to residential complex development, the population is increasing, so stable sales are expected in the future. Despite the COVID-19 situation, Square One achieved sales at 138% of fixed rent. In particular, Seobu TND and Homeplus have signed long-term triple net lease contracts for 8 and 12 years respectively, minimizing vacancy concerns.

Through the subsidiary REIT, it holds the Yongsan Grand Mercure Hotel, one of the three buildings of Seoul Dragon City. Seobu TND has signed a long-term triple net lease contract, securing stable rental income, and despite COVID-19, the average monthly sales exceeded the minimum guaranteed monthly rent by about 13%. Kim Byung-jik, director of Shinhan REITs Management, said, “Hotels have gone through a difficult period due to COVID-19, so now is the bottom for investment,” adding, “With the ‘With Corona’ policy, a rapid sales recovery is expected.”

Furthermore, the company plans to incorporate additional assets under development by Seobu TND into the REIT, including the cargo terminal site in Sinjeong-dong, Yangcheon-gu, Seoul, and the Najin shopping mall site in Yongsan, Seoul. The Sinjeong-dong cargo terminal site will be developed into an urban advanced complex logistics center, the Najin shopping mall site into a mixed-use residential and commercial facility, and the Incheon Square One 2 site into a data center. Director Kim explained, “Although it is a difficult time for REITs to secure assets, Shinhan Seobu TND REIT plans to continuously incorporate Seobu TND’s assets, ensuring dividend stability,” and added, “If necessary, we will also incorporate high-quality external assets to grow into the largest complex REIT.”

The 5-year average dividend yield of Shinhan Seobu TND REIT is 6.25%. Considering that the average market dividend yield of already listed REITs is in the 4-5% range, this is a high level, according to the company. As a corporation with a June and December fiscal year-end, investors holding Shinhan Seobu TND through this public offering can expect a dividend of about 1.8% on the December fiscal year-end. If held for one year, total dividends can reach the 8% range. This means earning more than seven times the return of a 1% regular savings deposit.

Finally, Director Kim said, “Backed by Shinhan Financial Group and able to incorporate various assets of Seobu TND, we are receiving positive responses from institutions,” and stated, “We will grow the assets under management to about KRW 3.33 trillion through incorporating rental housing, logistics, and data centers, making it a representative complex REIT with both stability and growth.”

Meanwhile, the total number of shares offered is 26,977,842. The public offering price is KRW 5,000 per share, with a total offering amount of approximately KRW 134.8 billion. Institutional investors will participate in demand forecasting on the 17th and 18th, followed by a three-day general subscription period from the 24th to the 26th. The lead underwriter is Korea Investment & Securities, with Shinhan Financial Investment and Hana Financial Investment participating as joint underwriters. The scheduled listing date is December 10.