KTB to launch REITs for logistics centers in Vietnam and housing in US

South Korean asset manager KTB Asset Management Co. plans to launch two overseas real estate investment trusts (REITs) to invest in Vietnam-based logistics centers and US-based multifamily housing assets early next year. The asset manager aims to reduce investment risk and increase profitability as the two asset classes have generated stable returns during the COVID-19 pandemic period.  

KTB said its global logistics centers REITs are Korea’s first REITs investing in Vietnam-based logistics centers as underlying assets. The asset manager in August signed a memorandum of understanding (MOU) with LogisValley Group, a Korean logistics service provider, to purchase three logistics centers in Vietnam for 120 billion won ($102.1 million).  

The centers covering a combined floor area of 109,819 square meters are based in Ho Chi Minh, Haiphong and Bac Ninh. LogisValley will hold a 30% stake in the REITs and also lease the centers, factors expected to reduce the risk of vacancy and asset value depreciation.
 
"The tenants of the logistics centers are Korean companies, and Samsung Vietnam’s revenue is nearly 30% of Vietnam’s GDP. Therefore, we see the Vietnam-based assets have low credit risk and low vacancy risk,” KTB’s global alternative investment head Jaesang Eum said. The asset manager plans to add more logistics centers based in Eastern Europe, the US and Korea to the REITs.  

LEADING OVERSEAS RE INVESTMENT

The asset manager also prepares for launching multifamily REITs in the US. KTB will execute co-investment with a US asset manager in the multifamily assets, of which the lease rate has reportedly exceeded 95% within a year of completing construction. 

“Multifamily assets have shown a stable lease rate and rental growth during COVID-19,” Eum said. “The asset class owned by listed REITs can grant individual investors steady dividend incomes through the renewal of rent contracts every year.”  

Approved as a REIT asset management company by Korea’s Financial Services Commission in June 2020, KTB said it took more than a year to select stable assets from pandemic-induced undervalued assets.

“We believe listed REITs can provide us the best way for long-term financing so that we can compete with the financing of overseas institutional investors,” Eum said.   

KTB has been active in overseas alternative investments for the past several years. In 2016, its first REITs invested nearly 110 billion won in New York Marriott at the Brooklyn Bridge. The asset manager and two other Korean institutions invested about $68.5 million in mezzanine debt secured by a Manhattan office building from Blackstone Group in 2017.

In August, it attracted capital from eight Korean institutions and closed a 550 billion won commitment to Bridge Debt Strategies Fund IV, a pooled investment vehicle targeting multifamily housing loans in the US. Targeting annual returns of 9-11%, the fund is slated to attract an additional 200 billion won in commitments in early 2022.

“The blind fund closed the first commitment in a short time as 90% of the assets were rated as stable,” Eum said. 
 
Eum said KTB’s principle for alternative investment is finding opportunities in a stable core market. “Although core assets are perceived to be highly stable but less profitable, there are opportunities if you consider cycles for each tangible asset. KTB believes there are always possibilities to make a profit -- even from overvalued assets by hedging cycles -- and we will continue stable investment activities," he said. 

Write to A-Young Yoon at youngmoney@hankyung.com
Jihyun Kim edited this article.