Aegis Asset Management Sends Shareholder Letters to 19 Domestic Listed REITs

Aegis Asset Management announced on the 22nd that it has distributed a shareholder letter containing three key requests aimed at enhancing shareholder value to 19 domestic listed REITs in which its managed funds have invested.

This shareholder letter was led by the Alternative Securities Investment Team at Aegis Asset Management, which manages domestic and international listed REIT investment funds. Since its establishment in 2017, the team has continuously expanded its investment scale in listed REITs both domestically and abroad, managing a portfolio worth 900 billion KRW, the largest in Korea. The domestic REIT investment scale amounts to approximately 500 billion KRW.

In the shareholder letter, three improvement requests were made to each listed REIT management company for the large-scale development and long-term growth of the domestic REIT market: ▲periodic provision of real estate asset operation information from an investor’s perspective ▲active IR activities ▲establishment of conflict of interest prevention measures. As a manager investing in listed REITs, this marks the formal implementation of the stewardship code.

First, they requested that real estate asset operation information be provided periodically so that investors can accurately assess the asset value of REITs. It was explained that the higher the information asymmetry, the greater the likelihood that the corporate value of the REIT is undervalued, and that the content of the information provided should be written in language suitable for real estate rather than general accounting standards.

They also urged efforts to attract foreign investors by sharing performance and outlook through regular investor relations (IR) activities and issuing English reports. Due to the nature of REITs, new assets must be secured through capital increases. If the REIT’s stock price remains undervalued relative to asset value, capital costs become excessively high, potentially leading to a vicious cycle where additional capital raising becomes difficult, thus active IR activities are necessary.

Furthermore, they emphasized the need for improvement activities such as board composition and decision-making systems to minimize conflicts of interest between REITs and shareholders. Since listed REITs evaluate both the held assets and the asset management company (AMC) managing the REIT, they urged prioritizing shareholders’ interests above all.

An Aegis Asset Management official stated, “We requested qualitative improvements in domestic listed REITs with the purpose of investing in the domestic listed REIT market to serve as a catalyst for growth while generating investment performance based on fiduciary duty,” and emphasized, “We will actively reflect the shareholder letter’s requests in REIT investments and continue to communicate with REIT AMCs for the development of the K-REIT market.”