K-REITs & Infrastructure Monthly — Vol.002 (2026-07)

The K-REIT & Infrastructure total return index rose 0.98%, and only Office and Retail beat it

Office rose the most at 2.10%, only slightly above its own 1.40% monthly median over the previous 12 months

Residential (-2.25%) was the only sector to fall

The gap between sectors was 4.3pp, the second-narrowest in 13 months and less than half the 10.35pp median of the same gap over the previous 12 months

The five sectors that fell hard in May and June were all positive in July, but gains of 0.02% to 2.10% fell far short of what they had lost

Three-month returns including July: Industrial -24.7%, Retail -21.9%, Office -15.1%, Diversified -11.7%, Infrastructure -8.0%

The K-REIT & Infrastructure total return index is a market-cap weighted, dividend-inclusive index calculated by Milleans. A suspended name enters the calculation at 0.00% while it does not trade.

Most of the gains in Office and Retail came from Hanwha REIT and Lotte REIT

Hanwha REIT rose 10.47%, and its 1.93pp contribution was most of Office's 2.10% gain; without it the sector returned 0.20%

Seven of the ten names rose, but Daishin Value REIT fell 7.77%

Lotte REIT rose 4.78% and contributed 3.25pp, lifting Retail 1.73%; the other three returned -4.73% on a market-cap weighted basis

E-REITs KOCREF fell 13.09% and took 1.85pp off the sector

Infrastructure rose 0.36%, as KB Balhae Infrastructure's 4.44% gain added 0.91pp and offset Macquarie Korea Infrastructure's -0.55pp

Macquarie, 79.5% of the sector, fell 0.69%

Industrial was flat at 0.02%, and only two of its five names rose: Mastern Premier REIT (38.31%) and Mirae Asset Global REIT (18.16%)

ESR Kendall Square, 55.6% of the sector, fell 0.90%, and Koramco Life Infra (-0.96%) and D&D Platform REIT (-3.09%) also fell

Residential fell for a third month as IGIS Residence REIT dropped 2.25%

After falls of 14.16% in May and 0.74% in June, July's drop left its three-month return at -16.7%

Diversified (NH All One REIT) was roughly flat, up 0.17%

The Monetary Policy Board raised the base rate from 2.50% to 2.75% on 16 July, a 25bp increase

It cited growth strengthening, led by exports and investment

It cited inflation running above target for a considerable time

It cited persisting risks on the financial stability side

It judged that domestic growth had broadened

Exports and investment continue to grow strongly, led by semiconductors, while consumption has held up

It also said this year's growth would come in well above the 2.6% projected in May

The Board had held on 28 May, so this was a turn from waiting to raising

In May it chose to wait, citing uncertainty around the course and spillovers of the Middle East conflict

The July statement drops that reservation and adds a judgment that a 25bp increase was appropriate

The reference rate that floating-rate borrowings follow rose 0.25pp

Fixed-rate borrowings meet that 0.25pp in one step, when they mature and are refinanced

The long end the asset discount rate is set off rose 0.17pp, nearly three times the 0.06pp on the short end that maturing borrowings refinance against

The 10-year stood at 4.26% and the 3-year at 3.76%, widening the 10Y-3Y spread 0.11pp to 0.50pp

The FOMC held its target range at 3.50-3.75% on 29 July

It has stood there since the 25bp cut of 11 December 2025

The vote split 9 to 3, the three dissenters all preferring a quarter-point increase at this meeting

The Fed judged activity solid but inflation still above target

Economic activity is expanding at a solid pace despite uncertainty tied to the Middle East conflict, with strong productivity growth and capital investment

Inflation remains above the 2 percent goal, reflecting in part supply shocks in sectors including energy

Only one sentence of the statement changed, the one on reserves

It moved from "reaffirmed" to "is continuing", leaving the policy of maintaining ample reserves itself unchanged

US price readings are for June 2026, published during July: headline CPI +3.46% year on year, core CPI +2.57%, PPI +5.51%. Minutes of the June meeting were published on 8 July; minutes appear three weeks after a decision, so July's are due in August.

As of the latest published month (2026-06).

The Ministry of Land, Infrastructure and Transport put a draft amendment to the REIT Act Enforcement Decree out for public comment on 3 July (Notice 2026-900)

Comments were due 12 August, so as of end-July this is a draft under notice rather than a rule in force

The supplementary provisions set it to take effect on promulgation

The stated purpose is to promote project REITs and widen what REITs may invest in

The substance is on the investment side

A new Article 2(3)9 brings securities equivalent to asset-backed securities issued by companies that have not registered an asset securitisation plan within the definition of real estate securities

That is conditional on meeting requirements the Minister sets by notice, such as being backed by real-estate-secured monetary claims

A new Article 31(3)15, with an amended Article 27(1)4, makes those securities something a REIT may acquire without limit

They also count toward the requirement that at least 70% of total assets sit in real estate

The operating scope is adjusted too

Article 31(1)8 adds elderly care homes under Article 32(1)1 of the Welfare of Senior Citizens Act to what a REIT may operate indirectly through a subsidiary

Article 37(2) writes pre-sale trusts for offices and officetels into the asset custody trust provision, which the notice describes as codifying an existing interpretation

Separately, "amendment of the articles of incorporation" is deleted from Articles 43(2)1 and 43(3)1, having been raised to the Act itself in November 2025, and the cross-reference in Article 12-3(30) is corrected from Article 14(2) to Article 6(3) of the Financial Investment Services Act Enforcement Decree.

At its regular meeting on 31 July the Financial Services Commission approved amendments to the Korea Exchange listing and disclosure rules

The duplicate-listing reform takes effect on 3 August

The rule change had been on notice from 7 to 14 July

A comment filed during that window asked that REITs be explicitly excluded from the duplicate-listing rules

The Commission took it up by writing into the rules that listings of securities classified as collective investment securities are not subject to the duplicate-listing restriction

The exclusion itself sits in the Korea Exchange listing and disclosure rules; it does not appear in the guideline annexed to the Commission's release.