SK Group’s REIT to go public this year
SK Group plans to list its real estate investment trust (REIT) on the Korean stock market sometime within this year, drawing investors’ attention whether the initial public offering (IPO) of the energy-telecom conglomerate’s REIT could reignite the market’s interest in real estate funds.
According to industry officials, SK selected Korea Investment & Securities recently as the lead manager for the IPO, aiming to complete the process this year. The land ministry is expected to give the green light to the move later this month.
SK Group’s REIT includes the conglomerate’s major assets such as Seorin Building in central Seoul. The 38-story building has been used as the group’s headquarters for the past 20 years since opening in 1999.
It was sold to Bank of America-Merrill Lynch in 2005 for 450 billion won ($400 million) to raise capital to acquire what became now SK Incheon Petrochem. The building was later sold to Hana Alternative Asset Management in 2011 for 550 billion won, and SK plans to repurchase it soon. The current price for the building is estimated at 990 billion won.
“Seorin Building is highly likely to be the first asset to be included by SK REIT, as the building is connected with the group’s history, and we are hoping to repurchase it,” an official from SK said.
SK Energy’s hundreds of gas stations nationwide are expected to be included as the main assets of the REIT. SK Group is said to have been preparing for the REIT IPO since last July.
Once some of SK affiliates’ properties are sold to the REIT, it will receive rent from the affiliates, which could invest the proceeds from the sale in research and development, or purchases.
Market watchers expect the REIT IPO to raise 500 billion won, outdoing Lotte Group’s REIT which was listed in October 2019 for 429 billion won.
Attention is also being focused on whether the REIT IPO will attract investors’ interest, as REITs have been shunned in the past year. On the U.S. stock market, however, REITs gained an average of 4.1 percent since the beginning of the year amid expectations of an economic recovery.