[Click eStock] "Koramco Energy REITs, Rising Alongside Logistics Real Estate Value"

Conversion Project of Gas Stations into Urban Logistics Spaces Observed
Shinhan Financial Investment Raises Koramco Energy REITs Target Price from 7,700 KRW to 8,300 KRW

[Asia Economy Reporter Gong Byung-sun] Koramco Energy REIT has started acquiring logistics spaces using funds secured from the sale of gas station assets. It is expected that the value of logistics real estate will rise in the future, along with increased value through development.

On the 26th, Shinhan Financial Investment maintained its investment opinion of "Buy" on Koramco Energy REIT. Additionally, the target price was raised from the previous 7,700 KRW to 8,300 KRW. The closing price on the previous day was 6,880 KRW.

The expectation for the investment direction is interpreted as the factor driving up the target price. Koramco Energy REIT sold 16 gas station assets and used the secured funds of 38 billion KRW to acquire logistics real estate. The day before, Koramco Energy REIT announced the acquisition of the Yongin logistics center and Gwanggyo gas station. The purchase amounts are approximately 20 billion KRW and 10 billion KRW, respectively.

Shinhan Financial Investment's analysis emphasizes the need to pay attention to the acquired assets. Considering the recent emphasis on the possibility of converting gas stations into urban logistics spaces, it seems highly likely that the gas station sites will be developed into "last-mile" logistics assets, which refer to the final stage where products ordered by consumers are delivered to customers.

Researcher Kim Hyun-wook of Shinhan Financial Investment explained, "Considering the location of gas stations in urban areas adjacent to roads, this is an appropriate development direction," adding, "As the value of logistics real estate continues to rise, the value increase through development will also be significant."

The existing strategy is also being steadily implemented. Koramco Energy REIT's strategy consists of three approaches: gas station mixed-use development, land lease, and direct development. The first mixed-use development applied is the Heukseok Delivery & Drive-Thru (DT) store, which recently opened. Since many existing Quick Service Restaurant (QSR) performances are good in the DT format, there is a possibility of additional development after observing the response at the Heukseok location.

Furthermore, three assets where LG Electronics Best Shop is located have already been decontaminated and turned into vacant lots. Since September, increased rent has already been collected. The Mokgam site, which is a direct development project, is currently in the permitting stage and is expected to start construction smoothly early next year.

Researcher Kim said, "As seen in the potential for urban logistics space development, flexible development strategies can maximize asset value through development suited to future circumstances," adding, "The target price was calculated by adding development value to the existing assumptions."