Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

The Homeplus REIT ("Korea Retail Homeplus #1 REIT"), which is expected to be completed by end of March, will be the biggest ever REIT IPO in Korea. The key investment merit of this Homeplus REIT is that it offers a stable dividend yield of about 6-7%. We expect a very strong demand for this Homeplus REIT IPO. Homeplus is the second largest retailer in Korea, after <a href="https://www.smartkarma.com/entities/6993" target="_blank" data-smartkarma-citation="entities:6993:1">E Mart Inc (139480 KS)</a>. Homeplus REIT will use 51 Homeplus stores (out of total of 141 stores) located throughout Korea as its base assets. Homeplus REIT is expected to raise between 1.5 trillion won and 1.7 trillion won in this IPO, of which the allocation between institutional and retail is set at 80:20. The IPO price range is between 4,530 won to 5,000 won. Rising interest rates also pose a concern for the company. Of the company's total long term debt, about 61% are floating rate based so higher interest rates could result in higher interest payments for the company. Overall, this Homeplus REIT IPO is likely to attract high interests among overseas institutional investors. However, there are some concerns that this deal could have relatively lower local institutions interest. One of the main reasons for this is because many large local institutions including the NPS have already invested in Homeplus as a consortium of MBK Partners. Although there is no public market value of Homeplus right now, many investors believe that the consortium led by MBK Partners overpaid for Homeplus back in 2015. As a result, these local institutions that have already invested stakes in Homeplus are less likely to further invest in the Homeplus REIT IPO.

The Homeplus REIT ("Korea Retail Homeplus #1 REIT"), which is expected to be completed by end of March, will be the biggest ever REIT IPO in Korea. The key investment merit of this Homeplus REIT is that it offers a stable dividend yield of about 6-7%. We expect a very strong demand for this Homeplus REIT IPO. Homeplus is the second largest retailer in Korea, after E Mart Inc (139480 KS). Homeplus REIT will use 51 Homeplus stores (out of total of 141 stores) located throughout Korea as its base assets. Homeplus REIT is expected to raise between 1.5 trillion won and 1.7 trillion won in this IPO, of which the allocation between institutional and retail is set at 80:20. The IPO price range is between 4,530 won to 5,000 won. Rising interest rates also pose a concern for the company. Of the company's total long term debt, about 61% are floating rate based so higher interest rates could result in higher interest payments for the company. Overall, this Homeplus REIT IPO is likely to attract high interests among overseas institutional investors. However, there are some concerns that this deal could have relatively lower local institutions interest. One of the main reasons for this is because many large local institutions including the NPS have already invested in Homeplus as a consortium of MBK Partners. Although there is no public market value of Homeplus right now, many investors believe that the consortium led by MBK Partners overpaid for Homeplus back in 2015. As a result, these local institutions that have already invested stakes in Homeplus are less likely to further invest in the Homeplus REIT IPO. 

Homeplus REIT IPO - The Largest Ever REIT IPO in Korea

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Homeplus REIT (HREIT KS)

Homeplus REIT IPO - The Largest Ever REIT IPO in Korea

The Homeplus REIT ("Korea Retail Homeplus #1 REIT"), which is expected to be completed by end of March, will be the biggest ever REIT IPO in...

Douglas Kim

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52-week Range

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P/E

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