MGRV Secures Additional 13 Billion Won Investment, Refutes CPPIB Withdrawal Rumors from Rental Market [Real Estate AtoZ]

TS Investment (10 Billion Won) and HB Investment (3 Billion Won) Join In
Securing 5% Stake in 500 Billion Won JV
Fifth Project Planned with Additional Land Acquisition in Seongdong District
New Development-Type Rentals Largely Unaffected by October 15 Regulations
Kangtae Cho, MGRV CEO: "Market Trust in Operational Capabilities Reaffirmed"

MGRV, the operator of the co-living facility 'Mangrove,' has secured an additional investment of 13 billion won from existing investors. This investment refutes rumors that the Canada Pension Plan Investment Board (CPPIB) was planning to withdraw. MGRV plans to use these funds for joint development projects with CPPIB.

A bird's-eye view of Mangrove Dangsan, which began construction last October. MGRV.

According to MGRV on December 7, the company has attracted additional investments from TS Investment (10 billion won) and HB Investment (3 billion won), both major domestic venture capital firms. The funds are intended to implement a 500 billion won development-type rental housing joint venture (JV) agreement signed with CPPIB in August. At that time, it was decided that CPPIB would invest 95% and MGRV 5%, and this funding will cover the 25 billion won corresponding to MGRV's 5% share.

The JV with CPPIB is proceeding as originally planned. Within three months, four new projects in Seoul have been confirmed, and a fifth project, secured through the recent additional land acquisition in Seongdong District, is also progressing as scheduled. All land purchases have been made entirely with equity capital, minimizing financial risk. In line with the JV's objectives, the company will focus on supplying rental housing specialized for young people and one- to two-person households in urban areas.

This follow-up investment is contrary to some predictions that global institutions such as CPPIB would withdraw from the domestic rental market due to the impact of the 'October 15 Real Estate Policy.' If withdrawal or JV suspension were true, it would not be possible for existing shareholders to make follow-up investments and confirm new projects.

Industry experts explained that, unlike acquisition-type rentals, which are shaken by regulations, development-type rentals remain viable. Under the October 15 policy, acquisition-type rentals in regulated areas are no longer eligible for comprehensive real estate tax exemptions. Loans are also unavailable for such investments, and the acquisition tax rate has been raised to 12%.

In contrast, the CPPIB-MGRV model, which involves developing new properties and then operating them as rentals, is less affected by these regulations. When directly developing new real estate, the existing benefits of comprehensive real estate tax exemptions and acquisition tax reductions still apply. While it is true that the acquisition-type rental market has contracted due to regulatory impacts, the momentum for supplying development-type rentals is being maintained.

In particular, pension funds and global asset management firms, which are typically long-term investors, usually set exit timelines of five to ten years. Short-term regulations are not grounds for withdrawing investments. An investment banking industry source commented, "There is no guarantee that the current regulations will remain unchanged five years from now," adding, "Pension funds invest based on the sustainability of urban housing demand and the long-term value of rental portfolios, rather than short-term policies."

Kangtae Cho, CEO of MGRV, stated, "This investment reaffirms the market's trust in MGRV's business direction and operational capabilities," and emphasized, "Through our collaboration with the Canada Pension Plan Investment Board, we plan to further expand the supply of high-quality, sustainable urban housing."