December 22, 2024

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Hypermarket chain operator Homeplus’ planned KOSPI listing of its real estate investment trust next month is likely to see enhanced interest by foreign institutional investors, its asset manager said on Feb. 27.

Korea’s largest REIT listing is pegged at 1.7 trillion won (US$1.50 billion), Korea Retail Asset Management CEO Ku Young-woo told reporters, adding that 84 percent of shares to be offered to public -- 70 percent of Homeplus K-REIT -- have been tentatively assigned for foreign institutional investors.

Homeplus Stores, the parent company Homeplus, will take 30 percent of the REIT shares once it goes public. 

Korea Retail Asset Management CEO Ku Young-woo

“We are seeing a flurry of foreign investor interest in subscribing to publicly-offered shares of Homeplus K-REIT,” Ku said. “Considering institutional investor demand at home and abroad, we don’t doubt the size of IPO.”

He also expected Homeplus K-REIT to have high liquidity through a possible inclusion into FTSE EPRA Nareit Developed Asia Index, saying it has been preparing to become a constituent.

“(Homeplus K-REIT) has met minimum requirements with regards to free-float market cap and liquidity, among others,” he said.

Foreign-affiliated underwriters including Citigroup Global Markets Korea Securities and Goldman Sachs Seoul Office, as well as Nomura Financial Investment Korea and Daiwa Securities Capital Markets Korea have been assigned the deal.

The securitized assets receiving REIT investment are 51 warehouse stores -- owned by either Homeplus or its parent company Homeplus Stores -- with a 2 million square-meter floor area real estate assets valued at up to 4.3 trillion won, according to Korea Appraisal Board. The REIT is expected to generate above 7 percent dividend yield each year, sourced from Homeplus’ capital gains through lease revenue.

“The mega IPO represents the growing REIT market size in Korea,” Ku said. “The listing of Homeplus K-REIT will open doors to the next phase of Korean REITs market.”

The event came weeks after Homeplus K-REIT unveiled a term sheet for going public. According to the document, the investment trust is seeking to list the entire 345.5 million shares. The price band of each share will be set at between 4,530 won and 5,000 won, so that the IPO could raise between 1.6 trillion won to 1.7 trillion won.

Homeplus K-REIT will be priced on March 14, following a global IPO roadshow starting Feb. 28. It is slated to go public on March 29.

Korea is home to 222 REITs, but only six of them went public, according to data compiled by the Land Ministry. The six listed REITs’ combined assets came to 1.1 trillion won, accounting for 2.5 percent of the entire REITs in Korea.

In December last year, Korea’s financial regulator announced plans to prop up REIT IPOs through a set of measures, including the abridged process of IPO screening.

The IPO of the REIT would be the biggest since Netmarble’s US$2.3 billion deal in April 2017. 

A promotional image of a Homeplus warehouse store

Founded in 1997 as a retail store owned by Samsung C&T later owned by a Korean arm of UK retail giant Tesco, Homeplus is now controlled by Seoul-based private equity firm MBK Partners through a US$6.1 billion stock purchase deal in 2015. MBK owns Homeplus Holdings, which holds its subsidiaries Homeplus Stores and Homeplus.

By Son Ji-hyoung (consnow@heraldcorp.com)