South Korea’s biggest real estate asset management firm IGIS Asset Management said Friday that it is eyeing its first real estate investment trust to list on the nation’s main bourse Kospi in mid-July.

IGIS Value Plus REIT is designed to indirectly invest in the commercial Taepyeongno Building. Located in central Seoul next to the Korea Chamber of Commerce and Industry, the 23-story office building was valued at 302.5 billion won ($250.6 million) as of July 1 last year, IGIS Asset Management managing director of domestic investment group Jung Sock-woo said in a press briefing.

“Since the building is located in the central business district in Seoul and has superior leaseholders such as CJ Logistics and Samsung Life Insurance, the possibility of vacancy is very low. We expect to achieve stable earnings from it.” 

After listing, the asset management firm will acquire profit-making securities of IGIS Private Real Estate Investment Trust No. 97, the private equity fund structured for investment in the commercial building. 

The REIT is expected to hand out some 6.45 percent annual dividends in returns from the securitized real estate to its investors over 10 years. It will further expand the portfolio by adding real estate funds and REIT by purchasing office buildings through recapitalizations.

By issuing 24.7 million new common shares at 5,000 won, the REIT is looking to raise up to 118.5 billion won. Under the plan, the REIT’s equity after listing is anticipated to reach 120 billion won.

Retail investor subscriptions of IGIS Value Plus REIT will take place June 16-17. Samsung Securities is underwriting the initial public offering.

Meanwhile, as the Korean government introduced tax benefits on dividend income made from REITs a day earlier, retail investors can get taxation favors. The Ministry of Interior and Safety announced that a 9 percent tax will be applied on REIT dividend income for the first three years, within the ceiling of 50 million won.

“Not just because it would be the first listing REIT of the year, the new taxation benefit will attract investors to IGIS Value Plus REIT,” said Shin Weon-jung, head of investment banking at Samsung Securities. “Yet the listed REITs’ market capitalization in the local stock market marked about 0.2 percent of total, we believe IGIS Value Plus REIT would be a secured REIT even in a volatile market.”

By Jie Ye-eun (yeeun@heraldcorp.com)