"SK REITs Combining Stability, Growth, and Dividends"

Expectations for New Mobility Charging Infrastructure Alongside Securing Prime Assets for Group Companies

[Asia Economy Reporter Minwoo Lee] SK REITs (Real Estate Investment Trusts) is being evaluated as having stability, growth potential, and dividend yield all at once. This assessment is based on the fact that it holds stable dividends, possesses high-quality assets within the group, and has the potential to grow into an electric vehicle battery and hydrogen fuel cell charging platform through its gas station assets.

On the 19th, Korea Investment & Securities made this evaluation of SK REITs. SK REITs is a composite REIT that operates by incorporating assets owned by SK Group companies. It was established with 100% investment from SK Corporation and, after going through an initial public offering (IPO), currently maintains a 50% stake. The incorporated assets include the SK Seorin Building and 116 SK Energy gas stations. The value of the incorporated assets based on purchase price is approximately 1.77 trillion KRW. The plan is to incorporate assets by creating subsidiary REITs for each sector of SK Group’s assets and having the parent REIT acquire these stakes.

From the fourth quarter of this year, an annualized dividend yield of 5.5% is expected to be maintained. SK REITs’ fiscal period and dividend payment cycle is three months, which is shorter than the typical six months for domestic listed public REITs. This is advantageous for those who prioritize dividend reinvestment. According to the business report for the second term (July to September 2021) disclosed on the 15th, the dividend per share was 53 KRW (annualized 4.3%). The dividend is lower than the expected 68 KRW presented in the securities registration statement because dividends from subsidiary REITs were not reflected in separate sales. Kyungtae Kang, a researcher at Korea Investment & Securities, predicted, “Assuming no additional asset incorporation or long-term debt refinancing, adding the dividend income from subsidiary REITs will stably maintain separate sales of 15.1 billion KRW and distributable profit of 10.6 billion KRW each fiscal period.”

It also has growth potential. Both the appreciation of incorporated asset values and the increase in investment assets are viewed positively. Researcher Kang explained, “SK REITs holds a right of first refusal for high-quality assets owned by SK Group companies such as the SKT Tower, and the subsidiary REIT’s gas station assets plan to expand beyond simple petroleum product distribution networks to develop into electric vehicle battery and hydrogen fuel cell charging platforms. Additionally, the exclusive opportunity to participate in investments when acquiring real estate assets for SK Group’s new businesses is also a strength.”