South Korea's Listed REITs Swell to 25, Total Assets Surpass 28 Trillion Won

The market size for listed REITs (Real Estate Investment Trusts) in South Korea has expanded rapidly. The number of listed REITs grew from 7 in 2019 to 25 in 2025, with total managed assets surpassing 28 trillion won. REITs are companies that help investors easily invest in real estate and receive dividends from profits such as rental income generated from these properties. The market has broadened with increased participation from major corporations, financial asset management firms, and trust companies, fueled by government policies to invigorate the REIT sector and a supportive financial climate. Investment targets have diversified from a focus on domestic offices to include logistics, retail, hotels, and overseas offices.

According to an analysis by Korea Investors Service (KIS), the ratio of financial costs to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for listed REITs has doubled since 2023 due to rising market interest rates. This increase in financial burden stems from the refinancing of debt borrowed during the low-interest rate period, while the cash flow generated from existing assets remained largely unchanged. The EBITDA/financial cost ratio indicates how many times a company's operating cash-generating ability can cover its actual interest expenses.

Financial buffer capacity has also diminished. Continuous capital outflows through dividends have prevented sufficient internal retention of cash flow. Furthermore, weakened stock prices have reduced the effectiveness of capital augmentation through rights offerings. Persistent negative market sentiment towards rights offerings has hindered the recovery of financial buffer capacity. Domestically listed REITs are structurally limited in accumulating internal reserves due to regulations and common practices. A system that utilizes depreciation expenses and gains from asset sales as dividend sources makes it difficult to secure funds for debt repayment and reinvestment.

The capital raising process for listed REITs exhibits inefficiencies. Unlike general corporations, where new asset inclusions or existing debt repayments show immediate investment effects, a mismatch occurs between the timing of asset acquisition and fund procurement due to shareholder allocation methods and practices in calculating issue prices. The recurring pattern of stock price declines after rights offering announcements makes timely capital raising difficult and increases reliance on market-based borrowing, accumulating risk factors in the funding structure. The high dividend payout ratio and the fee structure for asset management companies (AMCs), which are linked to asset size expansion, can easily lead REITs to prioritize maintaining short-term dividends and external growth over managing financial stability.

Some listed REITs have maintained high dividend yields by utilizing funds from rights offerings, unrealized gains, and borrowings, even amidst weakened financial buffer capacity. Korea Investors Service (KIS) has pointed to the need for regulatory reforms that enhance internal reserve capacity. This includes rationalizing the calculation of distributable profits so that excess dividends are utilized only when certain indicators are met, and ensuring that gains from asset sales can be internally reserved as needed, rather than automatically being distributed.