STAR SM REIT received a two-month business suspension due to embezzlement by a current executive. This is the first time a real estate investment trust (REIT) has faced such a suspension since 2014, marking an 11-year gap.
STAR SM REIT announced on the 18th that it received a two-month business suspension from the Ministry of Land, Infrastructure and Transport. Accordingly, the company is prohibited from acquiring new assets, developing properties, engaging in leasing and subleasing, and lending funds from the 17th of this month until May 16.
STAR SM REIT is a company that was listed on the securities market in 2016. After a change in its largest shareholder, the company changed its name from Modetour REIT to STAR SM REIT last year. Its main investment assets are two hotels located in Doksan-dong, Geumcheon-gu, Seoul, and Dongtan, Hwaseong, Gyeonggi Province.
Since early this year, the Ministry of Land, Infrastructure and Transport has been conducting a special inspection on STAR SM REIT and discovered that a current executive embezzled 3.08 billion won. According to the ministry's audit results, the executive invested 10.5 billion won into a company that is in a state of capital erosion, and it was revealed that the company lent money it received from the executive's family, causing losses to the REIT.
The Ministry is reported to have imposed the business suspension on STAR SM REIT due to concerns about the potential outflow of assets.