Hanwha Asset Management announced on the 22nd that it recommends Hanwha REITs during the year-end pension account contribution season.
Hanwha REITs is the largest listed office REIT in Korea, with a market capitalization of 736.4 billion won as of December 19. Its average annualized dividend yield over the past year stands at 7.51%. Since its listing on KOSPI in March 2023, it has maintained a stable dividend policy.
As a sponsor REIT, another strength is its stable leasing structure. Hanwha affiliates occupy 78% of the total leased area, and long-term lease contracts secure predictable cash flows. Prime office space accounts for 83% of the portfolio, and the vacancy rate is at an industry-low of 1.23%.
Financial soundness has also improved. Hanwha REITs successfully refinanced approximately 770 billion won in the second half of this year, lowering its borrowing rate by 99 basis points. This resulted in an annual cash flow improvement of about 7.1 billion won.
REITs (Real Estate Investment Trusts) that maintain high dividend yields like this can maximize tax-saving benefits when included in pension accounts. Major benefits of pension accounts such as pension savings and individual retirement pensions (IRP) include deferred taxation on dividend income. This system allows taxation on dividend income to be postponed until pension withdrawals. The deferred portion can be reinvested.
If you receive an annual dividend of 1 million won, the amount available for reinvestment is 846,000 won in a regular account (after deducting 14% dividend income tax and 1.4% local income tax), but 1 million won in a pension account. This results in a difference of 154,000 won.
Hanwha REITs stated, "In a market environment with increased volatility, REITs that provide stable rental income are an attractive investment alternative," adding, "Investing through a pension account can maximize the benefits of deferred taxation."
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