Shinhan Financial Group Achieves First Success in Activating Funding for Public-Supported Private Rental Projects

Shinhan Financial Group announced on the 23rd that it successfully completed a securitization transaction through the sale of rental REIT shares held by construction companies to facilitate smooth financing for the public-supported private rental housing project on the 28th of last month.

A rental REIT refers to a real estate investment company established through joint investment by the Korea Housing & Urban Fund and private project proposers, with the purpose of directly constructing or purchasing and supplying rental housing.

The public-supported private rental housing project is a business in which private developers such as construction companies supply rental housing with support from the Housing & Urban Fund under the "Special Act on Private Rental Housing." Rental REITs acquire and lease private rental housing with the intention of renting it out for 8 to 10 years or more.

Through this, high-quality rental housing is supplied to the housing market, but construction companies face increased financial burdens as their investment funds become fixed for a long period. To reduce this burden on construction companies, the government announced the "Measures to Revitalize Financing for Public-Supported Private Rental Housing Projects" in February and has been promoting institutional improvements.

Accordingly, Shinhan Financial GIB Group (banking and securities) designed a transaction structure to securitize the rental REIT shares of Hyundai Engineering & Construction and SK Ecoplant through consultations, aiming to support smooth financing for private developers and alleviate their participation burdens.

This transaction was completed on the 28th of last month, thanks to the active cooperation of the Housing & Urban Guarantee Corporation, which empathized with the contribution of collaboration among financial institutions, private developers (construction companies), and public institutions to the government's housing stability policy.

This is the first case since the start of the public-supported private rental housing project in 2015 where construction companies' investment funds were securitized through financial institution participation. Shinhan Financial explained that this is significant as it eased the long-term liquidity burden on construction companies, enabling additional supply of rental housing and leading to housing stability for low-income households.

A Shinhan Financial official stated, "This securitization transaction led by Shinhan Financial GIB Group is a more proactive ESG project aligned with the purpose of the housing stability policy for low-income households," adding, "Shinhan Financial will continue various efforts to ensure that successful cases like this, where the synergy between banking and securities is well demonstrated, continue."