KORAMCO REITs Management and Trust

REITs Overview

Definition of REITs: "Koramco Asset Management’s Research & Strategy (R&S) team released its ‘1Q 2025 Commercial Real Estate Market Report (Recovery Amid Uncertainty: Uneven but Rebounding).’ The report covers offices, logistics, data centers, and hotels. While deal volumes are rising, Koramco notes that macro and geopolitical uncertainty remains elevated. With liquidity still tight, investors are screening opportunities more selectively than in prior cycles.

By sector, Seoul office vacancy rose to ~4.9%, up roughly 2ppt YoY, driven by new supply in the Magok district. Given relatively lower rents vs. other submarkets, Magok should appeal to cost-conscious occupiers. Roughly 3.27 million m² of new CBD stock (≈35% of existing CBD inventory) had been slated post-2029; however, start delays imply completions will be pushed out by several years.

New logistics supply has clearly rolled over, easing oversupply concerns. Prime logistics cap rates now exceed ~6%. Investment demand is expected to concentrate in facilities with tenant-preferred specifications.”"

REITs Operating Flow

Benefits of REITs

For Investors

Attractive Risk-Adjusted Returns: Disciplined research-driven acquisitions can deliver compelling risk-adjusted returns; value-add initiatives (e.g., capex/remodeling) and institutional asset management unlock incremental NOI and capital gains.
Resilience and Inflation Hedge: Backed by real assets, REITs provide a partial inflation hedge. Downside is mitigated by liquidation value, while prudent underwriting on rents, vacancy and opex supports stable dividend yields.
Liquidity: Listed REIT shares can be traded and monetized in cash markets.
Access to Institutional-Grade Assets: Enables smaller tickets to participate in large-scale, institutional real estate.

For Corporates / Occupiers

Headquarters Acquisition Solution

Achieve owner-like control and optimize balance-sheet/lease economics, leveraging AMC best-practice operations to maximize efficiency.

Building naming rights available
External signage (naming rights) permitted
Board representation enables participation in key operating decisions
Future leasing needs can be pre-coordinated for proactive responses

Meet HQ ownership needs with modest equity (≈10% of total capitalization)
Participate in rental income and asset appreciation as a shareholder
Capture below-market effective rents to lower occupancy cost

Right of first offer/first refusal can secure long-term ownership optionality
Professional AMC governance minimizes operational risk
Structure allows corporates to focus on core business and enhance competitiveness

Tax Efficiency: Distributing ≥90% of distributable income generally eliminates entity-level corporate tax (Korean CTA §51-2). Compared with direct ownership, REIT holdings benefit from favorable local tax treatment on land components (e.g., flat 0.2% property tax rate and exclusion from comprehensive real estate tax under Local Tax Act §106 & Enforcement Decree §102).

Asset Monetization

De-recognize fixed assets to improve leverage and liquidity; maintain strategic influence via REIT equity and ROFO/ROFR to facilitate repurchase at vehicle maturity.

Use sale proceeds to delever the balance sheet
Hold REIT equity to retain owner-like status and receive income
ROFO/ROFR enables re-acquisition at REIT exit
Affiliate facility-management capabilities can be utilized

Stabilizing Development Risk

A development REIT can act as the nominal developer/borrower (SPC), with conditional forward-purchase structures allowing contractors/developers to sell all or part under completion terms, funding project costs via the REIT’s pre-acquisition.

Direct Development via REIT

Development REIT serves as SPC/borrower of record
AMC leads business planning and financing; AMC executive may serve as REIT representative director

Forward-Purchase (Completion) Structure

Developer/contractor sells whole or part to the REIT subject to completion
Pre-acquisition proceeds fund project costs → lower carry and greater execution certainty

Joint Development via In-Kind Land Contribution

Landowners/corporates contribute land in kind to the REIT, which then undertakes development

Types and Characteristics of REITs

REIT Categories

Type	Legal Form	Investment Focus	Description
Corporate Restructuring (CR) REITs	Paper company (statutory vehicle)	Distressed/turnaround real estate	Invest/operate via a professional AMC (e.g., Koramco REITs & Trust)
Externally Managed REITs	Paper company (statutory vehicle)	General real estate
Self-Managed REITs	Operating company	General real estate	Invest/operate internally with in-house staff • No pass-through tax benefits at the corporate level

종류별 특성

Item	Externally Managed	CR REITs	Self-Managed
Investment Focus	General real estate	Corporate restructuring assets	General real estate
Entity Form	Paper company (no full-time staff)	Paper company (no full-time staff)	Operating company (in-house staff)
Minimum Capital	KRW 5bn	KRW 5bn	KRW 7bn
Shareholding Dispersion	No single holder >50%	No limit	Shareholding Dispersion
Public Offering	≥30% of capital	Not mandatory (private placement allowed)	≥30% of capital
Listing	Eligible upon meeting criteria	Not mandatory	Eligible upon meeting criteria
Asset Composition	• ≥80% real estate & related securities • ≥70% direct real estate	≥70% direct real estate	• ≥80% real estate & related securities • ≥70% direct real estate
Development Allocation	Up to 100% with shareholder approval

REITs Market Trends

Sustained Growth: "As of end-Dec 2024, Korea had 400 operating REITs with aggregate AUM of KRW 100.07 trillion—the first time the market surpassed KRW 100 trillion since inception. Growth has been underpinned by allocator diversification, rising demand for alternatives, and corporates’ monetization needs.

Policy support for public REITs—tax incentives and listing facilitation—has broadened the investor base and accelerated new listings.

Koramco is the only AMC managing three listed REITs (E-REITS KOCREF, Koramco Energy REIT, Koramco The One REIT), driving share gains through capability building and product differentiation while broadening retail access and elevating market quality."

AUM Trajectory: "As of December 2024, 400 REITs were active in Korea, with total AUM reaching KRW 100.07 trillion—the largest scale since the system’s introduction. Growth has been driven by investors’ demand for diversification, rising appetite for alternative assets, and corporates’ increasing use of REITs for capital recycling.

Government initiatives promoting public and listed REITs, including tax incentives, have strengthened market infrastructure and expanded investor participation.

KORAMCO is the only REIT AMC in Korea managing three listed REITs—E-REITs KOCREF, KORAMCO Energy REIT, and KORAMCO The One REIT. Leveraging its differentiated product expertise, KORAMCO continues to strengthen its market leadership while advancing the qualitative growth of Korea’s REIT market and expanding access to indirect real estate investments."