As exchange-traded funds (ETFs) gain the ability to invest in listed indirect real estate investment trusts (REITs) or real estate and REIT ETFs, there are projections that IGIS Value REIT will benefit.
Research Institute Lee Kyung-ja of Samsung Securities noted on the 11th. With the passage of the revised Enforcement Decree of the Capital Markets Act and the Financial Investment Business Regulation at the State Council meeting that day, ETFs can now invest in listed indirect REITs. The Capital Markets Act had previously prohibited funds from investing in indirect funds, citing excessive fee collection and complex product development as reasons.
The criteria for listed indirect REITs are that they invest more than 40% of their total assets under management (AUM) in revenue securities. IGIS Value REIT, IGIS Residence REIT, and NH Prime REIT are among those that qualify.
This Research Institute evaluated that IGIS Value REIT is the top beneficiary because the inclusion requirements for major ETFs specify a market capitalization of over 200 billion won. The market capitalization of IGIS Value REIT was 224.3 billion won based on the closing price that day.
This Research Institute stated, "In the case of TIGER REIT Real Estate Infrastructure, the largest listed REIT ETF, assuming that IGIS Value REIT is included proportionally based on its market capitalization, the expected investment ratio would be 2%," adding that it estimates that purchasing shares of IGIS Value REIT would require an acquisition of at least about 12 billion won.
This Research Institute also projected that IGIS Residence REIT, with a market capitalization in the 100 billion won range, could be included in some ETFs. The market capitalization of NH Prime REIT was 84.3 billion won based on the closing price that day, making ETF inclusion unlikely in the short term.
This Research Institute further noted, "IGIS Value REIT and IGIS Residence REIT, despite essentially adopting the structure of a regular master REIT rather than a dual-fee system, had to endure unfavorable supply and demand due to structural reasons," and stated that the latest regulatory amendment is expected to provide them with the greatest benefits.