Koramco Asset Trust, Performance Improvement Through Differentiated Business Structure

REITs Division Drives Performance
Solid Results in Real Estate Fund and Trust Divisions
Major Deals Closed for Arc Place and The Asset Gangnam Amid Market Downturn

Koramco Asset Trust announced on the 4th that it recorded an operating profit of 58.2 billion KRW on a consolidated basis last year, turning to a profit compared to the previous year. According to Koramco's audit report, operating revenue last year increased by approximately 67.7% from the previous year to 211.6 billion KRW. It achieved 43.2 billion KRW.

This contrasts with the situation where real estate trust companies' profits have decreased due to high interest rates and a real estate market slump that have continued for several years. Koramco explained that its ability to generate high profits despite the market downturn was due to its differentiated business structure.

The parent company, Koramco Asset Trust, operates REITs and real estate trusts. Its subsidiary, Koramco Asset Management, focuses on real estate funds. Although both invest in real estate, they operate in business sectors with different characteristics and structures, creating synergy or complementing each other.

Last year's performance was driven by the REITs division. In the REITs division, Koramco succeeded in selling 'The Asset Gangnam' and 'Golden Tower,' the Samsung Fire & Marine Insurance headquarters, which was recorded as the largest commercial real estate transaction in Korea last year. It also generated profits by closing major deals such as purchasing 'Arc Place,' a landmark building on Teheran-ro, from the US-based asset management firm Blackstone.

The subsidiary Koramco Asset Management also achieved results by acquiring 'The Exchange Seoul' in Gwanghwamun and the 'NH Nonghyup Capital Building' in Yeouido. It established a joint venture (JV) with the global alternative investment firm Starwood Capital Group and signed a joint investment agreement worth approximately 400 billion KRW.

Performance in the trust division was somewhat sluggish. The order volume decreased as the portfolio shifted from a loan-type trust business, which could earn high fees but involved significant risks, to a general management-type trust business.

Compared to recent competitors in the real estate trust sector who have recorded large deficits due to contingent liability risks related to responsibility-completion-type managed land trusts becoming a reality, Koramco is evaluated to have performed relatively well. Koramco's trust division succeeded in reducing the ratio of non-performing assets from the previous 57% to the 37% range, the largest reduction among 14 trust companies.

Koramco recently reorganized its management system into a separate CEO structure by business division. This plan aims to promote internal executives from each business division to CEO positions to pursue strong responsibility along with high expertise.

As of the end of last year, Koramco's total assets under management (AUM), combining REITs and real estate funds, reached 33 trillion KRW. It has maintained the number one market share in the private REITs market for 24 years. In the trust division, it has increased its presence in the redevelopment industry by completing five trust-type redevelopment projects.

Jung Seung-hoe, CEO of REITs and General Management at Koramco Asset Trust, said, "Koramco's strength lies in creating optimal product structures that investors desire based on an efficient and stable business portfolio." He added, "We will continue to enhance expertise by business division and contribute to achieving investors' investment goals through creative and new investment methods that have not been experienced before."