Investment highlights

Investment Highlights

Management Strategy

1) Building long-term growth momentum

LOTTE REIT is committed to securing long-term growth trends by continuing to take on a range of assets including retail stores, logistics centers, and data centers based on deal pipelines for a range of properties owned by Lotte Group.

Securing outstanding
deal pipelines

  • Right of First Offer (ROFO)
    to Lotte Shopping and
    Lotte Global Logistics

  • Previously securitized/
    leased Properties of
    Lotte Shopping

  • Properties such as Office
    and Data Centers owned
    by Lotte Group

  • Other Properties
    newly
    developed
    by Lotte Group

Medium and Long-Term
Growth Roadmap

2) Providing a solid dividend yield through stable rental income

Assets held by LOTTE REIT are under 100% master lease contracts with anchor tenants(LOTTE Shopping, LOTTE Global Logistics) with high credit ratings. Moreover, we offer a stable and solid dividend yield through long-term lease contracts with the tenants, the triple net structure, and annual rent escalation as stipulated in the contract.

  • Long-term Lease

    Minimum 7 years to maximum 15 years of lease term depending on the tranche

    Securing long-term stable rental income

  • Master Lease

    All of LOTTE REIT’s properties are occupied by anchor tenants

    Hedging the risk of rental income decline by having 0% vacancy rate

  • TRIPLE-NET Structure

    Tenants to pay insurance costs, taxes, utilities and maintenance and repair expenses

    Reducing lessor’s management costs

  • Annual Rent Escalation

    TRANCHE A,B,C: A 1.5% rise every year

    TRANCHE D,E : CPI increase vrate applied every year + variable rent

    TRANCHE F : CPI increase rate applied every year

Providing stable and solid
dividend yield
Anchor tenants of LOTTE REIT
under the master lease contract

Largest retailer with stable financials and exceptional
business competitiveness

Tenant LOTTE SHOPPING CO., LTD.
Key Business Department store, Discount store,
Consumer electronics store, etc.
Credit rating AA-(Based on Korea Investors Service, Korea Ratings and NICE Investor Service as of 2022A)
Capital KRW 141.4 billion (2022A)
Revenue KRW 15,476 billion (2022A)

※ Source: DART
(Online disclosure system operated by
FINANCIAL SUPERVISORY SERVICE)

Integrated logistics company with solid financials that is
currently ranked second in the domestic parcel delivery
market

Tenant LOTTE Global Logistics Co., Ltd.
Key Business Parcel delivery, SCM,
Global business
Credit rating A0(Based on Korea Ratings and NICE Investor Service as of 2022A)
Capital KRW 170.9 billion (2022A)
Revenue KRW 3,998.3 billion (2022A)

3) Hedging risks through portfolio diversification

To enhance the value of the company and shareholders, LOTTE REIT is incorporating diverse assets including not just retail, but also logistics centers, offices, and data centers that will serve as future growth engines, and risks are mitigated through portfolio structures centered around the Seoul metropolitan area.

Portfolio Strategy

Diversified Portfolio Structure

Portfolio structure centered around
the Seoul metropolitan area

4) Strategies utilizing the value of real estate for held assets

By leveraging the additional availability for financing through revaluation of assets held by LOTTE REIT, we can strategically incorporate additional assets into our portfolio. (The average increase in appraised land value of our held assets was 7.0% from 2017 to 2022)

Strategies for utilizing
the value of real estate

FAQs

  • Q. Who will be entitled to receive dividends?
    A. All shareholders who hold LOTTE REIT share in the last working day of fiscal year closing months will be entitled to receive dividends.
  • Q. When will the dividends be paid?
    A. LOTTE REIT plans to pay dividends bi-annually at the end of June and December each year.

    The distribution of dividends will be determined through the board of directors’ resolution and the shareholders’ approval. The payment will be made within one month after such approval.
  • Q. Is LOTTE REIT principal protected?
    A. LOTTE REIT is an investment-linked product which is not protected by the Depositor Protection Act, therefore the principal is not guaranteed.
  • Q. How does LOTTE REIT generate revenue?
    A. LOTTE REIT recieves stable rental income based on its master-lease contracts with LOTTE Shopping Co., Ltd., LOTTE Global Logistics Co., Ltd., and Hotel LOTTE and the general lease contracts for L7 Hotels Gangnam Tower, as well as fixed dividend income through its investment in preferred stock for DF Tower.
  • Q. How is the dividend amount calculated?
    A. Pursuant to the Real Estate Investment Company Act, a REIT must distribute at least 90% of its maximum distributable profit to the shareholders. In addition, the REIT may also pay dividends in excess of the maximum distributable profit to the extent that such amount does not exceed its depreciation cost.

    Therefore, LOTTE REIT plans to pay dividends up to the sum of its net income and depreciation cost.
  • Q. What is the Master Lease Contract that LOTTE REIT signed with Lotte Shopping and Lotte Global Logistics?
    A. Under this contract, LOTTE Shopping and LOTTE Global Logistics lease all the properties held by LOTTE REIT, and pay the rent accordingly.

    Through this, LOTTE REIT can operate business in all properties without any burden of vacancy.
  • Q. What is the Triple Net contract that LOTTE REIT signed with Lotte Shopping and Lotte Global Logistics?
    A. The Triple Net structure is a contractual structure under which tenants pay all taxes, public utility charges, insurance fees and costs of repairs and building maintenance, as well as rent.

    LOTTE REIT expects to maintain a stable dividend yield ratio by applying the Triple Net Contract structure to the Master Lease Contract with Lotte Shopping and Lotte Global Logistics.