Korea Real Estate Investment & Trust Co. (KOREIT) and Korea Asset In Trust, the No. 1 and No. 2 domestic real estate trust companies, fell into a simultaneous "earnings shock." Last year's operating profit plunged about 60% from a year earlier. Rising expense in borrowing-type trust businesses centered on regional business sites, while failing to generate profit, is analyzed as the cause of the steep drop in operating profit.
According to each company's provisional earnings disclosures on the 9th, last year's operating profit at Korea Asset In Trust came to 9 billion won (separate basis). That was down 61.1% (14.1 billion won) from 23.1 billion won a year earlier. The company's operating profit has declined for two consecutive years since 2024. After posting 104.6 billion won in 2023, operating profit plunged into the 20 billion won range in 2024 and fell below the 10 billion won mark last year.
Operating profit shrank because revenue from fees and the like fell while expense increased. Korea Asset In Trust's fee revenue last year was 61.7 billion won, down 23.3 billion won (27.4%) from 85 billion won a year earlier. Expense is also continuing to rise. Korea Asset In Trust's interest expense jumped by more than 10 billion won, from 13.9 billion won in 2024 to 26.1 billion won last year. However, with an increase in non-operating income, net profit rose to 25.4 billion won from 16.5 billion won a year earlier. A Korea Asset In Trust official said, "Operating profit decreased as sales fell and expense increased, but net profit rose due to higher non-operating income."
Korea Real Estate Investment & Trust Co. (KOREIT) also saw a sharp drop in operating profit last year. The company's operating profit last year totaled 28.3 billion won, down 57.2% (37.9 billion won) from 66.3 billion won a year earlier. A structure in which money earned from fees and the like fell while selling, general and administrative expense and other operating costs increased led to the profit decline.
Korea Real Estate Investment & Trust Co. (KOREIT) and Korea Asset In Trust rank No. 1 and No. 2 by total asset among Korea's 14 real estate trust companies and are listed on the Korea Exchange. KOREIT's asset size is 1.6499 trillion won (as of the third quarter of 2025), ranking first, and Korea Asset In Trust is second at 1.2997 trillion won.
The largest shareholders of Korea Real Estate Investment & Trust Co. (KOREIT) are MK Investment, led by Chair Cha Jeong-hun, with a 24.25% equity stake, and MK Electron with 11.21%. KOREIT also holds Dongbu Corporation (56.22% equity) through Keystone Eco Prime, a fund it formed with Keystone PE.
Korea Asset In Trust is a trust company affiliated with MDM, Korea's largest real estate developer. MDM holds 28.76% equity and MDM Plus has 10.13%, bringing MDM and related parties' combined equity stake to 54.34%.
In the industry, some say the profitability deterioration at the No. 1 and No. 2 real estate trust companies stems from fallout from weakness in borrowing-type land trusts. In a borrowing-type land trust, the trust company accepts land in trust on behalf of land owners who lack funds or development know-how, directly raises funds (borrowing), and takes responsibility for the entire process from permits to sales and completion, then returns the revenue. The trust company bears the business risk and usually receives 3%–4% of sales as compensation (fees). Last year, Korea Asset In Trust's order intake (contracted trust fees) totaled 98.1 billion won, of which borrowing-type land trusts accounted for 59 billion won (43 billion won from redevelopment projects + 16 billion won from general projects), or 60.1%.
Korea Real Estate Investment & Trust Co. (KOREIT) also increased its borrowing-type land trusts. On a cumulative basis last year, order intake for borrowing-type land trusts was 115.4 billion won, up 61.5 billion won from a year earlier. There are 24 ongoing borrowing-type land trust projects, totaling 11,451 households. The construction progress rate at these business sites averages 30.3% (as of the end of Dec. 2025), but the sales rate is only 49.3%.
Yoon Jae-seong, senior researcher at NICE Investors Service, said, "Korea Real Estate Investment & Trust Co. (KOREIT) and Korea Asset In Trust did not perform well overall in borrowing-type real estate trusts, and credit loss expense increased in this area."
An industry official said, "Borrowing-type real estate trusts are rarely done in Seoul or the greater capital area and are mostly carried out at business sites in regional areas," and added, "The regional presales market has been very weak recently, presales revenue has fallen, and profit is declining."