Aegis Asset Management to Expand Dividends for Listed REITs... "Join Value-Up"

Aegis Asset Management announced on the 11th that its listed REITs, Aegis Value Plus REIT (hereinafter Value REIT) and Aegis Residence REIT (hereinafter Residence REIT), will join the value-up policy and promote dividend expansion.

Value REIT is Aegis Asset Management's first public offering and listed REIT, launched in July 2020. It was introduced with the prime-grade office building "Taepyeong-ro Building" in the Central Business District (CBD) as its underlying asset.

Since listing, Value REIT has implemented a dividend policy of over 6% annually based on the public offering price, and since last year, it has been achieving a dividend target of over 8% annually. Through recapitalization, it plans to realize valuation gains of the Taepyeong-ro Building without asset sales and promote special dividends. Based on the settlement in August, the dividend will be at least 600 KRW per share (equivalent to 24% annually based on the public offering price).

They will introduce a "dividend first, investment later" approach. This policy helps investors decide whether to invest after the dividend amount is confirmed. It improves the previous "blind dividend" system, where shareholders entitled to dividends were determined before the settlement and the dividend amount was decided afterward, thereby protecting shareholder rights.

In line with the trend of value polarization according to asset quality (Flight to Quality), plans to improve existing assets are also underway. First, at the representative asset Twin Tree Tower, they plan to acquire gas stations, convenience stores, and other properties separately owned by other owners to secure single ownership of the entire asset. A sales contract was signed last month, and ownership transfer is expected to be finalized around August after the seller completes gas station demolition and soil contamination cleanup. This will eliminate price discounts caused by divided ownership, remove risk factors such as flammable materials, and allow the new space to be used as new retail facilities.

Additionally, remodeling of the Taepyeong-ro Building is under review to increase asset value. They will begin detailed design to improve the exterior, expand the lobby space through low-floor extensions, enlarge office-exclusive areas, and raise ceiling heights to increase rent and asset value.

Residence REIT plans to raise its target dividend yield to 6% by 2026. Residence REIT is the first domestic public offering and listed REIT investing in residential assets. It was listed in August 2020 with 3,578 units of the public-supported private rental housing "The Sharp Bupyeong" as its underlying asset. Subsequent assets include domestic co-living properties such as "Deus Myeongdong," "Deus Pangyo," and "Nudite Hongdae," as well as overseas assets like "New York Spring Creek Tower" (multi-family rental housing) and "UIUC Illini Tower" (dormitory).

Residence REIT plans to expand dividends by realizing part of the valuation gains of its representative asset, The Sharp Bupyeong, early. It has paid dividends at around 5.32% annually until last year since listing, but plans to raise the target dividend rate to about 6% annually from this year through 2026.

Furthermore, it plans to sell its underlying asset Deus Myeongdong to recover its initial investment. The expected timing is the third quarter. If the asset sale succeeds, the first capital recycling cycle (purchase-operation-sale) to maximize shareholder value will be achieved.

Residence REIT manages a portfolio with a 7:3 ratio between traditional residential assets such as rental housing and alternative residential assets such as co-living and dormitories. It aims to find new opportunities in the public-supported private rental housing business promoted by the government and actively incorporate new urban transit station area assets that meet the increasing preference of single-person households.

An Aegis Asset Management official said, "To meet shareholder expectations for resolving the Korea discount, Aegis Asset Management will actively promote dividend expansion for listed REITs this year," adding, "We will continue to pursue active financial restructuring, asset acquisition, and continuous value enhancement after acquisition to grow into a REIT that rewards shareholders' choices and trust."