"Expecting Sale Gains Following Excess Dividends"

Kim Dong-jung, Head of REITs Business Division at NH Nonghyup REITs Management
Recovery Trend in REITs Prices Following the Legoland-Related PF Crisis

Last year, REITs (Real Estate Investment Trusts) stocks, which were overlooked due to interest rate hikes and a sluggish real estate market, are gaining renewed attention by providing investors with substantial returns through dividends.

Kim Dong-jung, Head of the REITs Business Division at NH Nonghyup REITs Management (hereafter NH REITs Management), recently told Asia Economy, "REITs are representative medium-risk, medium-return financial products that are required to distribute more than 90% of operating income such as rental income to investors, ensuring stable dividend income," adding, "There is also a structure where capital gains can occur as dividends on profits from asset sales can be expected."

NH REITs Management is implementing a shareholder-friendly policy of paying excess dividends three consecutive times through its listed REIT, NH All One REIT. Since its listing in November 2021, NH All One REIT paid dividends twice last year in March and September, both exceeding targets. This month, it plans to pay a cash dividend of 162 KRW per share. This is an annualized rate of 6.48%, higher than the original target of 6.01%. Based on last year's closing price, the current dividend yield is about 9%. The dividend yield is calculated by dividing the dividend per share by the market price on the reference date.

Kim Dong-jung, Head of REITs Business Division, NH Nonghyup REITs Management
[Photo by NH Nonghyup REITs Management]

Kim said, "Regarding the second half dividends, the dividend yield may decline compared to the target due to increased interest expenses following the refinancing of Bundang Square, but we will strive to minimize the decline in dividend yield." He added, "NH Prime REIT and NH All One REIT have so far focused on operating dividends centered on rental income, but this year we plan to establish a strategy to return capital gains from asset sales to shareholders as a result of asset value enhancement."

NH REITs Management planned Korea's first fund-of-funds REIT, NH Prime REIT, which was listed on the KOSPI market in December 2019. Subsequently, it planned the launch of physical asset listed REITs, incorporating four physical real estate properties?Bundang Square, A-One Tower Dangsan, A-One Tower Ingye, and Icheon Doji Logistics Center?making office and logistics the primary investment sectors. NH All One REIT was also listed in November 2021. Meanwhile, prices of REITs, which had sharply declined following the Legoland project financing (PF) incident, are showing signs of recovery. REITs whose prices have recovered above their initial public offering prices are increasingly appearing.