Independent Research, Turtles all the way down

Turtles all the way down

Independent Research

Writing short articles about mis-priced boring stocks around the world.

Equity Bottom-Up

Retail Opportunity Investments Corp. / Equity Bottom-Up

<ul><li>Say that we have an industry selling a commodity and we want to figure out how above average returns can be generated.</li><li>Our starting point is almost perfect competition. </li><li>We cannot create a brand, a differentiated product/service, a monopoly, a cartel or cheat.</li></ul>

Say that we have an industry selling a commodity and we want to figure out how above average returns can be generated.Our starting point is almost perfect competition. We cannot create a brand, a differentiated product/service, a monopoly, a cartel or cheat.

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

United States

Retail Opportunity Investments Corp. is a fully integrated and self-managed real estate investment trust ("REIT").  The Company specializes in the acquisition, ownership and management of necessity-based community, and neighborhood shopping centers in the western and eastern regions of the United States anchored by national and regional supermarkets and drugstores.

Retail Opportunity Investments Corp. (ROIC US)

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Retail Opportunity Investments Corp. (ROIC US)

Earning excess returns in commodities

Say that we have an industry selling a commodity and we want to figure out how above average returns can be generated. Our starting point is almost...

Turtles all the way down

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

Market Cap (USDm)

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