◼ ESR KendallSquare REIT (365550 KS) has achieved a significant milestone by successfully selling a logistics asset for 81 billion KRW (approximately US$62 million), this transaction has garnered an impressive total investment return of c.30% over a period of 2.5 years
 

◼ ESR KendallSquare REIT is the only KOSPI listed REIT that NPS (National Pension Service) has enlarged its ownership over 5% in 2023
(Icheon 1)

ESR KendallSquare REIT (hereinafter referred to as "the REIT") made an announcement today (June 12th) regarding the sale of its owned logistics center, "Icheon LP 1" (Kendall Square Professional Investment Real Estate Trust No. 6).

The property is situated at 452 Hoeok-ri, Majang-myeon, Icheon-si, Gyeonggi-do, and is a cutting-edge logistics center encompassing a total floor area of approximately 15,000 pyeong (1 pyeong is approximately 3.3 square meters).

The REIT initially acquired the asset for 66 billion KRW during its initial public offering in December 2020. The logistics center, known as "Icheon LP 1," was successfully sold for a selling price of 81 billion KRW, resulting in a significant total return of c.30% including dividends paid from the trust.

Furthermore, the asset disposal generated an impressive internal rate of return (IRR) of around 19% over the 2.5-year investment period, as reported by the company.
Given that the required rate of return (IRR basis) for typical real estate investment private funds is usually set at 15%, the REIT's achievement in operating core assets and surpassing the industry's expected returns is truly remarkable.

Despite concerns regarding possible declines in real estate prices resulting from rising interest rates and the aftermath of the COVID-19 pandemic, the REIT has showcased its resilience and profitability by executing the successful sale of its logistics asset at a highly competitive cap rate of 4.0% in the market. This achievement effectively allays any fears surrounding the depreciation of logistics real estate assets and provides clear evidence of the overall high value inherent in the REIT's portfolio.

It is worth highlighting that the company's initial public offering (IPO) price per share was set at 5,000 KRW. Given that the recently sold asset was part of the IPO portfolio, the company's explanation suggests that the selling price, which was c.23% higher, serves as evidence of the current significant undervaluation of the company's stock. ESR KendallSquare REIT is the only listed Korean REIT in 2023 that has witnessed the National Pension Service (NPS) increasing its ownership over 5% level. This signifies the NPS's growing confidence and interest in the REIT as an investment opportunity.