PE-backed Homeplus withdraws $1.5b REIT listing on weak demand

Photo: Reuters

Homeplus Co., backed by private-equity firm MBK Partners Ltd., has withdrawn a planned real estate investment trust listing, dashing hopes that the retailer would transform South Korea’s nascent REIT market with the country’s biggest-ever deal.

Korea Retail Home Plus REIT 1 decided to cancel the planned initial public offering of as much as 1.7 trillion won ($1.5 billion) after gauging investor demand, the company said in an emailed statement Thursday. Investors are not used to large REIT offerings in South Korea and overseas demand fell below expectations, according to the statement.

The South Korean government has been encouraging REIT listings to attract investment into commercial real estate instead of the country’s long-hot housing market. The number of listed REITs in Asia’s fourth-largest economy is still small, with only six publicly traded property trusts out of the total of 222, data from the government show.

Homeplus planned to price the unit sale Thursday and begin trading March 29, according to terms for the deal obtained by Bloomberg earlier. It offered 345.5 million units at 4,530 won to 5,000 won apiece, the terms show.

Lotte Group, another Korean retail giant, was also seeking to set up an asset management company for a REIT, a spokesman said this month.

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