Korea Land & Housing Corporation (LH) announced on the 31st that it will start soliciting asset management companies (AMCs) to participate in the 'Project Financing (PF) Advancement Development Anchor Reits Project.'
This project involves LH and a private development anchor reit selecting excellent business sites at the bridge loan (short-term loan before construction) stage for investment, recovering funds when executing the main PF. This aims to stabilize the real estate development market and revitalize construction activity by allowing the public to invest in business sites with excellent feasibility but struggling to secure initial project funding.
The anchor reit is expected to be established at a total scale of 800 billion won, with 200 billion won contributed by LH and others through private financing and company bonds guaranteed by the Korea Housing & Urban Guarantee Corporation (HUG). There will be more than two anchor reits to be established.
The investment amount is up to 100 billion won per business site (within 50% of land acquisition costs). The investment will be recovered upon conversion to the main PF.
The investment targets are business sites that meet the criteria set by the Ministry of Land, Infrastructure and Transport and LH, including ▲feasibility ▲land acquisition status ▲permission potential ▲capital stability. Final selections will be made through the reits' investment review committee.
During the selection of investment targets, priority will be given to projects that will support the supply of dwellings (rentals) and projects such as artificial intelligence (AI) data centers that will be utilized as national growth engines, while also considering local development activated by participation or investment from local governments or public corporations.
The development anchor reit AMC will accept applications at the end of September and will select the preferred negotiators and final businesses through evaluations in October and November.
AMC will be responsible for the overall operation of the reits, including recruiting investors, discovering investment business sites, operating the investment review committee, and executing and managing funds.
The applying company must hold qualifications for managing real estate investment companies under the Real Estate Investment Company Act and must be operating a real estate development collective investment (reits, funds) of over 100 billion won, with at least two core operational personnel required to participate. It must also meet the criteria for securing investors.
In particular, the applying company must propose an aggregate investment commitment amount through attracting private investors (exceeding 50% of the total investment commitment) and must suggest a management strategy and investment plan that considers the characteristics of the funds and the business goals of the reits. Additionally, it must propose at least one business site that meets the selection criteria for investment targets at the time of application.