This article was published on ChosunBiz MoneyMove at 2:20 p.m. on April 1, 2025.
Concerns are rising in the market regarding two types of real estate investment trusts (REITs) that Daishin Financial Group plans to list this year. While Daishin is confident that these assets are attractive investments coinciding with the decline in interest rates, there are indications that they do not have clear differentiation from other listed REITs. Recently, it has become a trend for large corporations to include their headquarters buildings in REITs.
According to the investment banking (IB) industry on the 1st, Daishin Value REITs, which includes the group’s headquarters building 'Daishin 343', has completed attracting pre-IPO equity investment worth 2.04 billion won. Major insurance companies and securities firms, such as KB Securities and Korea Investment & Securities, along with institutional investors, participated. Daishin Value REITs is expected to carry out a public offering worth 100 billion won in the second quarter.
Daishin Group plans to continue incorporating domestic assets it owns or is developing into Daishin Value REITs, aiming to grow it into a super-large listed REIT with assets exceeding 2 trillion won. Daishin Value REITs has signed long-term lease contracts of up to 10 years with group affiliates, including Daishin Securities. It is expected to yield an average dividend yield of approximately 6.4% over seven years through quarterly dividends.
Park Yeong-gon, head of Daishin Asset Trust's REIT Investment Division, emphasized that 'many institutional investors participated early on in the value and security of the Daishin 343 building.'
However, the Daishin 343 building has a history of attempting to sell but failing. There are concerns that integrating a building that failed to sell into the REIT is not much different from how major conglomerates like Lotte and Hanwha have 'passed on' unsold real estate to investors.
These REITs are struggling with stock prices due to the inclusion of non-prime assets and large-scale capital increases aimed at that purpose. Daishin Value REITs targeting a super-large REIT in the 2 trillion won range raises concerns that frequent capital increases will be conducted.
In response, a Daishin official noted, 'Daishin 343 is located in an area with excellent transportation and accessibility within the Central Business District (CBD) centered around City Hall, Gwanghwamun, and Euljiro,' emphasizing its investment attractiveness compared to other headquarters building REITs.
Daishin Global REITs, which invests 100% in major assets in Tokyo, is generally evaluated as needing to be cautious of volatility when investing. Daishin Global REITs stated that the investment assets consist of 12 office and residential properties located in core areas of Tokyo. About 67% of the investment assets are offices, while approximately 33% are residential properties. It aims for an annualized dividend yield of 6.6% and plans to include more premium assets in global cities in the future. This also indicates the possibility of capital increases. Daishin Global REITs plans to hedge 100% of the principal investment and 50% of expected dividends, and the absence of transfer taxes is considered an advantage.
Points to note when investing in Daishin Global REITs include currency fluctuations and the possibility of economic slowdown. Last year saw a record low yen, but the recent transition of Japan into a period of interest rate hikes forecasts a downturn in the local real estate market. For instance, the Korean Investment Trust Asset Management's public fund 'Korean Investment Tokyo Hanjomon Office Real Estate Investment Trust' included premium assets at subway stations without vacancy risk but yielded a return of around 3% just before liquidation, which is lower than the target return (around 5%).
An industry official said, 'Expectations for interest rate cuts are weakening as the Federal Reserve reduces the number of interest rate cuts this year, and issues like the Homeplus incident are casting a chill over the REIT market,' adding that 'when the listing timing occurs will also play an important role in attracting interest.'