Monthly dividends at an annual rate of 8% and 9.9% separate taxation possible
Net assets of 104.6 billion KRW about 6 months after March listing
Stable monthly high dividends and asset value expected to rise due to interest rate cuts benefits
Interest is growing among individual investors in real estate investment trust (REIT) exchange-traded funds (ETFs), which are considered prime beneficiaries of interest rate cuts.
Samsung Asset Management announced on the 12th that the net assets of the KODEX Korea Real Estate REITs Infrastructure ETF have surpassed 100 billion KRW. This comes just over six months after its listing in March.
KODEX Korea Real Estate REITs Infrastructure is a monthly dividend product that diversifies investments across domestic infrastructure assets and listed REITs. Since expectations have strengthened that the U.S. base interest rate will be cut starting in September, individual net purchases have continued.
Domestic listed REITs have shown a stable upward trend in stock prices since the end of last year. As more products demonstrate active efforts to increase dividends, investor preference for REIT investments appears to have risen. Due to the concentration in the metropolitan area and the resulting shortage of offices in city centers, rental income from REITs owning A-grade prime offices in Seoul continues to increase, enhancing the attractiveness of investing in domestic listed REITs.
For REITs that need to raise new funds and refinance existing loans, interest rate cuts can have a positive effect. It is expected that they will raise funds under favorable conditions and actively pursue the acquisition of new assets that had been postponed. This is anticipated to play a significant role in diversifying the portfolios and improving the future growth potential of Korean listed REITs and infrastructure companies. For example, Macquarie Infrastructure, which accounts for about 23% of the investment in KODEX Korea Real Estate REITs Infrastructure, acquired the Hanam Data Center to diversify its traditional infrastructure portfolio.
Since its listing, KODEX Korea Real Estate REITs Infrastructure has paid a total monthly dividend of 168 KRW, approximately 3.18%, over five distributions. The expected annual dividend yield is around 8%.
As a public real estate collective investment vehicle subject to the Restriction of Special Taxation Act, investors can receive a separate tax rate of 9.9% on dividend income up to 50 million KRW. This benefit can be utilized by applying through the securities firm the investor uses. Investors with annual financial income exceeding 20 million KRW have the advantage of avoiding comprehensive financial income taxation.
Recently, as investor interest in monthly dividends has increased, real estate REITs have the advantage of relatively stable and consistent dividend levels since rental income from buildings is the main source. During periods of interest rate cuts, capital gains from the appreciation of held assets can also be expected. As a diversified asset in an investment portfolio, it can be used not only in general accounts but also in pension accounts.
Ma Seung-hyun, a manager at Samsung Asset Management, said, "Most market participants believe that the U.S. base interest rate cut will begin this month, which has drawn significant attention to REITs that have struggled due to the high interest rate environment." He added, "Since real estate REITs can be used alongside equity and bond products to diversify investment portfolios, KODEX Korea Real Estate REITs Infrastructure will be a good investment tool for investors planning monthly dividend investments in both general and pension accounts."
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