Aegis Asset Management Draws Attention with Tenant Equity Participation-Style Win-Win Approach

[Asia Economy Reporter Park Soyeon] Aegis Asset Management, the nation's top real estate specialized asset management company, is considering a win-win model in which tenants receive equity instead of rent.

According to the investment banking (IB) industry on the 28th, Aegis Asset Management is reviewing the introduction of a contract structure where tenants of commercial real estate under management participate in equity instead of paying fixed rent.

This idea was proposed by former CEO Cho Gapju, who has led Aegis Asset Management since the passing of founder the late Chairman Kim Daeyoung, now serving as head of the New Business Promotion Team. At the end of last year, Cho made a bold move from head of management support to head of new business promotion, signaling plans to secure new growth engines such as space business and build a future blueprint.

Cho envisions tenants in commercial buildings not merely as tenants but sharing part of the equity with Aegis to grow together. This means small business owners and startups with growth potential but currently difficult conditions can operate their businesses in spaces managed by Aegis Asset Management.

An IB industry official said, "Former CEO Cho is very interested in win-win cooperation," adding, "This strategy emerged to realize even a little the philosophy that if small business owners thrive, the commercial real estate market will also gain strength."

Cho has about seven years of experience in real estate asset management at Samsung Life Insurance and Hyundai Construction, and later joined Koramco, Korea's first real estate asset management company, as an early member. He served as head of investment management at Koramco Asset Trust (executive director) and CEO of Aegis Asset Management. Known as a living witness to the history of Korean REITs, Cho focuses on the social aspects of real estate investment and development.

Accordingly, Aegis Asset Management has recently been strengthening ESG (environmental, social, and governance) investments and dedicating efforts to solving social issues such as jobs and win-win cooperation. When acquiring the Millennium Hilton Hotel in Namsan, Seoul last year, they proposed a win-win plan to rehire existing hotel employees while developing the site into a complex of offices, hotels, and retail stores.

During the pre-completion development period, they provided educational programs and agreed to pay about 70% of the existing salary monthly for livelihood stability. They also offered compensation and re-advancement programs for employees nearing retirement or those seeking new careers instead of employment. Such win-win and compensation measures are unprecedented in the hotel industry.

Meanwhile, Aegis Asset Management surpassed 20 trillion KRW in fund assets under management at the end of last year, becoming the first domestic real estate management company to do so. The company's growth has continued without any downturn. The assets under management, which were below 2 trillion KRW at the end of 2013, have grown more than tenfold in about eight years. Contrary to concerns after COVID-19, they accumulated over 5 trillion KRW. As of the end of last year, the workforce exceeded 400 employees.