Koramco REITs Management and Trust made the unusual request that investors in the listed REIT Koramco The One REIT exercise caution. With a large special dividends ahead, it noted that investors should weigh both dividend rights and the share price level, as the price could undergo a sharp adjustment after going ex-dividend.
According to the financial investment industry on the 26th, the record date for Koramco The One REIT's dividends is the 31st. Given the current trade settlement system (T+2), investors must buy shares by the close on the 27th to secure the right to the special dividends. Starting on the 28th, transaction will take place without the right to the special dividends.
Koramco REITs Management and Trust, in a shareholder letter on the 19th, conveyed this schedule and asked investors to be mindful of potential share price volatility after going ex-dividend. It is unusual for a listed REIT manager, ahead of a large return of capital, to directly mention even the share price level after the ex-dividend date.
Koramco The One REIT's estimated shareholder return is about 11,300 won per share. Of this, about 8,900 won will be paid as a special dividends, and the remaining roughly 2,400 won is expected to be distributed as residual assets during the REIT's liquidation. The approximately 8,900 won special dividend includes the existing August settlement of account dividend.
That is why there are projections that the share price could undergo a large adjustment after going ex-dividend. Koramco The One REIT's closing price on the 25th was 10,960 won. Once the right to the special dividends expires, the value corresponding to the dividends is reflected in the share price, so there could be a substantial gap with the current price.
In particular, instead of reinvesting in new asset after dividends to continue operations, Koramco The One REIT is pursuing liquidation. This means the economic value that the market can assess after the ex-dividend date may be re-evaluated around the residual assets that will go back to shareholders in the future. The company's estimated residual asset distribution is about 2,400 won per share.
However, it cannot be concluded that the actual share price will drop to 2,400 won. After the ex-dividend date, the price is determined by market supply and demand, the liquidation schedule, the size of residual assets, and other factors.
Behind Koramco The One REIT's decision to liquidate is the sale of the Yeouido Hana Securities Building. Koramco The One REIT sold the building for 811.2 billion won in June. In the process, it secured a sale gain of about 318 billion won and chose to return it to shareholders and liquidate the REIT rather than reinvest in new asset.
With delisting ahead, index deletion and the ETF holdings that track it are also cited as variables for the share price after the ex-dividend date. The special supply-demand dynamics of a REIT facing liquidation may coincide with the ex-dividend following a large special dividends.
Ahead are a board resolution on the 31st-term cash dividends and approval at the regular shareholders meeting in Nov. The special dividends are scheduled to be paid in Nov. After creditor protection and residual asset distribution procedures, the plan is to complete liquidation in Feb. next year.
However, dissolution of the REIT is finally decided through a special resolution at the shareholders meeting. The size of shareholder returns may also change during the settlement of account results and the audit process.
Koramco REITs Management and Trust emphasized that if investors focus only on the size of the special dividends, they could miss the post–ex-dividend share price volatility.
Koramco REITs Management and Trust said, "Because the special dividends are large, the share price could fall to the level of the residual asset distribution scheduled for payment," and added, "Please make a careful investment decision by considering both the timing of right confirmation and the current share price level."