This article appeared in Signal, the capital markets compass, at 15:35 on May 20, 2026.
Listed Korean real estate investment trusts (REITs) are facing burdensome external funding costs as government bond yields surge and investor caution spreads following JR Global REIT's (348950.KS) court receivership filing. Even sponsor REITs backed by major conglomerates are taking a cautious approach, signaling they will first watch how other REITs proceed with funding.
According to investment banking (IB) industry sources on Wednesday, Koramco Life Infrastructure REIT (357120.KS) issued 15 billion won in private corporate bonds on May 18. The bonds were split between one-year and two-year maturities, with coupon rates set at 5.0% and 5.2%, respectively. The company also raised 105 billion won on May 13 by issuing two-month electronic short-term notes, marking the first market-based funding by a listed REIT since JR Global REIT entered receivership proceedings.
Funding rates have risen across the board. When Koramco Life Infrastructure REIT issued 10 billion won in short-term notes in February this year, it paid a rate of 4.1%, whereas the notes issued on May 13 carried a rate of 4.5%, with the maximum initially proposed at up to 5%. The company's short-term credit rating is "A2-," in contrast to securities and capital firms with the same rating around the same period that paid rates in the high 3% range.
Listed REITs with strong credit ratings are also leaning toward a wait-and-see stance. Lotte REIT (330590.KS), which holds the highest credit rating (AA-, stable) among listed REITs, has 240 billion won and 155 billion won in public bonds maturing in August and October, respectively. The company had been considering refinancing but has reportedly shifted to a cautious approach, signaling it will first watch how other listed REITs proceed with funding.
The move appears to factor in the surge in government bond yields amid heightened caution over REIT investments following JR Global REIT's receivership filing. "In Lotte REIT's case, secured bonds are the main funding instrument, and if rates rise without any change in the nature of the collateral, it puts the company at a significant disadvantage when marketing to investors," an IB industry official said. "To ease the concerns surrounding REITs for the time being, a rate premium needs to be paid, so the company appears to want to make decisions after first observing how other listed REITs raise funds."
However, some analysts argue that sponsor REITs backed by major conglomerates and financial groups have little reason to overreact. Unlike JR Global REIT, which filed for receivership, the assets held by sponsor REITs are based in Korea, and investment flows are likely to remain solid thanks to potential support from their parent groups. "From the perspective of REIT bond investors, there are signs of a shift to reduce exposure to A-rated REITs and move toward sponsor REITs," another IB industry official said. "Sponsor REITs are also concerned that investor sentiment may weaken somewhat, but the impact is judged to be limited."
