As NH Prime REIT invests in Gangnam N Tower, the possibility has increased that the virtual asset exchange Bithumb will purchase the tower for use as its headquarters, leading to projections that NH Prime REIT may once again initiate special dividends. NH Prime REIT holds shares in the Gangnam N Tower real estate fund. However, the timing of receiving dividends may vary significantly depending on when the contract is finalized.
According to the REITs industry on the 17th, KB Real Estate Trust is reportedly planning to transact Gangnam N Tower with Bithumb using a share deal. A share deal refers to a transaction where only the fund's equity is traded while the real asset remains intact, changing the beneficiary. KB Real Estate Trust holds Gangnam N Tower through KB Gangnam Office No. 1 REIT. NH Prime REIT also possesses a 9.95% stake in KB Gangnam Office No. 1 REIT.
The transaction price of Gangnam N Tower is reported to be around 44 million won per 3.3 square meters. Considering that KB Gangnam Office No. 1 Trust Management REIT purchased the tower for 29.25 million won per square meter in September 2018, the simple yield is approximately 50%. NH Prime REIT can also gain sales revenue proportionate to its holdings.
NH Prime REIT is a fund that does not own buildings directly but instead invests in REITs or funds that hold building ownership. NH Prime REIT has previously initiated special dividends using profits derived from the sale of buildings that were held by the real estate funds it invested in.
The sale of 'The Asset,' the Samsung Fire & Marine Insurance building in Seocho, is a prime example. Koramco REITs Management and Trust formed REIT No. 43, purchasing 'The Asset' for 30.49 million won per square meter in 2018, then selling it last year for 45 million won per square meter, which is a 47.6% increase. NH Prime REIT invested 13 billion won during this process, yielding approximately 10.3 billion won in profits. NH Prime REIT has decided to reinvest the principal and distribute the profit as special dividends.
NH Prime REIT decided to pay dividends of 518 won per share based on the settlement at the end of November last year. At that time, the dividend yield based on the share price was 11.4%, significantly exceeding the usual yield of 2-3%. Considering the profits from the sale of Gangnam N Tower, a similar level of special dividends might be anticipated.
NH Prime REIT also issued special dividends when it sold the Samsung SDS Tower in Jamsil, Songpa-gu, Seoul in 2023. NH Prime REIT invested 15 billion won through a real estate fund, receiving a total of 21.5 billion won including the principal and the profit from the sale.
NH Prime REIT invested the principal of 15 billion won through Koramco REITs Management and Trust last year in the Arc Place in Gangnam, Seoul, while distributing all the remaining profits as special dividends. At that time, the dividend was 400 won per share, resulting in a dividend yield of 8.9%.
NH Prime REIT's fiscal periods end in May and November each year. If the sale of Gangnam N Tower occurs by May, the dividend record date would be at the end of May, and the dividend could be deposited into accounts around September. However, if it takes longer to complete the transaction, the record date might shift to the end of November, with dividends possibly payable around March 2026.
However, it is essential to analyze the stock price movements around the ex-dividend date (the day the right to receive dividends is lost). For the sale of the Samsung SDS Tower, the stock price dropped by 6.2% around the ex-dividend date, and for the sale of Gangnam N Tower, the stock price fell by 8.8%. This indicates that depending on the timing of purchases, the stock price drop could exceed the dividend profits.
Additionally, NH Prime REIT's real estate fund investment of 41 billion won in Seoul Square, located in Jung-gu, Seoul, matures in February 2026. The lease rate, previously at 90%, has dropped to 79% since the primary tenant, 11st, vacated. The high vacancy rate could be disadvantageous for the sale, leaving the extension of the investment and other factors as uncertainties.