Koramco Asset Trust has maintained top credit ratings from Korea's two major credit rating agencies, even as the real estate trust industry faces a broad decline in creditworthiness.
Koramco Asset Trust said Wednesday it received a corporate credit rating of "A" with a "Stable" outlook in regular assessments by NICE Investors Service and Korea Investors Service, while maintaining an "A2" rating on its commercial paper from both agencies. With this, Koramco secured the top creditworthiness in the trust industry for the ninth consecutive year based on NICE's assessment.
The real estate trust industry has recently seen a string of credit rating downgrades, driven by a combination of delayed real estate market recovery, the burden of recovering trust account loans, and the materialization of contingent liabilities in completion-guaranteed land trusts. The structure has pressured both profitability and financial stability, as recovery of proceeds from projects that received company funds has been delayed while bad debt costs and borrowing burdens have increased.
Even in this environment, Koramco Asset Trust has maintained stability through a REIT-centered business portfolio and conservative trust operations. It has secured recurring revenue sources such as REIT asset management fees, dividend income, and fees related to acquisitions and disposals. In its trust business, it is diversifying its structure through selective orders centered on urban redevelopment projects and by expanding collateral trusts, management-type land trusts, and agency services. While limiting new completion-guaranteed land trust orders, the company has managed potential loss burdens by simultaneously recovering proceeds from existing projects and setting aside provisions.
Credit rating agencies cited this business structure and financial management capability as key grounds for maintaining the rating. NICE Investors Service pointed to the stable business base and earnings power centered on the REIT operation division, as well as the easing of financial burden from accumulated earnings and capital expansion. Korea Investors Service also cited the REIT-centered portfolio, a relatively stable revenue structure compared with competitors, and the likelihood of maintaining sound financial stability as major evaluation factors.
Performance backs this up. As of the end of June, Koramco Asset Trust's REIT assets under management stood at approximately 17.7 trillion won, holding the No. 1 position as an asset management company (AMC) in the private REIT sector for 25 consecutive years, excluding Korea Land and Housing Corporation (LH). Combined with its trust division and subsidiary real estate fund assets, its scale ranks in the top two in Korea.
Last month, the company was successively named as the preferred bidder to serve as the outsourced operator for domestic real estate blind funds pursued by the Government Employees Pension Service and the Korea Post, securing an additional roughly 1 trillion won in investment capital. Its capability to discover investment opportunities across various real estate sectors and design financial structures, along with stable management governance, was reportedly highly regarded.
Improvement is also clear on the financial stability front. As of the end of March this year, shareholders' equity stood at 521.3 billion won and the debt ratio at 27.9%. The debt ratio fell from 41.7% at the end of 2024 to 31.0% at the end of last year, then improved further in the first quarter of this year. Credit rating agencies assessed that asset soundness and financial stability are at an excellent level, considering the company's preemptive provisioning, expanded capital buffer, and short-term liquidity management ability.
Jung Seung-hoe, chief executive of Koramco Asset Trust, said the recent changes in creditworthiness in the trust industry show that risk management and providing predictable investment performance are becoming more important criteria than external growth. He explained that Koramco is strengthening its stable REIT-centered revenue base, while managing exposure to risky assets by selectively taking on trust business centered on general management-type and collateral trusts.
Jung added that the greater the market volatility, the more important the capabilities across the entire process of investment structure design, asset management, and recovery become. He said the company would establish itself as the real estate finance company that investors can trust most, based on a stable financial structure and strict internal controls.
