"Let's Revisit the Extinct Ritz"

Opportunity for Bargain Buying Amid Ritz Stock Price Drop
Diverse Factors Including Index Inclusion and Asset Sales

On the 16th, when the won-dollar exchange rate started to rise, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Junho Hwang] "Let's reconsider the extinguished REITs."

There is an analysis suggesting the need to take another look at the somewhat deflated REITs (Real Estate Investment Trusts). Attention is focused on whether this could be an opportunity for bargain buying amid various positive factors.

Jang Moonjun, a researcher at KB Securities, stated on the 16th, "As REIT stock prices have indiscriminately fallen, a buying opportunity has emerged," adding, "This is a time favorable to investors, where each REIT needs to improve its marketability to meet investors' expectations." The number of REITs, which was only seven in 2020, has increased to 20 as of this month. Large-scale REITs exceeding 1 trillion won have expanded to three, including Lotte REITs, and many newly listed REITs such as KB Star REITs, Logis Valley Shinhan REITs, and Daishin Global Core REITs are lined up. However, the average REIT stock price fell by 1.90% this month.

Inclusion in global REIT indices is also continuing. On the 19th, JR Global REITs will be included in the 'Developed Asia' section of the ‘FTSE EPRA Nareit Global Real Estate’ benchmark index related to REIT investments. This is the third inclusion following ESR Kendall Square REITs and Lotte REITs. Passive fund inflows are expected upon inclusion. Lee Kyungja, a researcher at Samsung Securities, analyzed, "ESR JR Kendall Square REITs, included in this index in the first quarter, saw a 9% stock price increase after inclusion, and Lotte REITs, included in June, also showed performance despite the burden of refinancing due to rapid interest rate hikes and corporate bond maturities." The securities industry predicts that SK REITs are highly likely to be included in this index in December.

Another future strength is the ability to confirm the prices of held assets through asset sale events by some REITs. Currently, sales of Shinhan Alpha REITs’ Yongsan The Prime Tower and NH Prime REITs’ Samsung SDS Jamsil building (with a 17% stake) are scheduled. Researcher Jang explained, "The advantage is that general investors can indirectly confirm the price changes of the real assets held by REITs through sale events," adding, "It is significant in that investors can judge whether the stock is oversold or overbought compared to asset value by comparing with the current stock price level."