The Korea Real Estate Investment Trusts Association welcomed on the 20th the inclusion of the 'project financing advancement catalyst development anchor REITs' in the second supplementary budget plan announced by the Lee Jae-myung government for this year.
The association said, "We actively welcome that the construction economy revitalization policy based on REITs is included in the supplementary budget," adding, "It is also expected that the government will invest funds first through anchor REITs at the bridge loan stage with this supplementary budget."
The government has decided to create a 1 trillion won PF advancement catalyst anchor REIT to support the PF project from the initial stage. As the PF market tightens, the focus is on lending land acquisition expenses at low interest rates for projects facing funding challenges.
Previously, businesses had to execute bridge loans at an interest rate exceeding 10% per year, but receiving investment from this anchor REIT allows for an interest rate of 5-6% per year. This is the first time the government is supporting the bridge loan stage of development projects. The government will recover the investment once the development project transitions to the main PF stage.
The government will invest 300 billion won in the PF advancement catalyst anchor REIT. The operator and institutional investors will contribute 100 billion won, while an additional 600 billion won will be raised through corporate bond issuance.