K-REITs & Infrastructure Monthly — Vol.004 (2026-09)

Retail was the only sector to rise (3.73%) while the other five fell, and the K-REIT & Infrastructure total return index lost 1.67%

Infrastructure (42.6% of the index) and Office (33.8%) contributed -0.88pp and -0.85pp, most of the decline

The gap between the best and worst sectors was 6.5pp, about two-thirds of its median over the previous 12 months (9.95pp)

Infrastructure, Residential, Office and Diversified all fell by between 2.06% and 2.78%

The K-REIT & Infrastructure total return index is a market-cap weighted index calculated by Milleans that reflects confirmed dividends on the ex-dividend date. Sector and constituent returns are total returns with dividends reinvested on the payment date, so dividends enter them at a different point than they enter the index, and September returns for the names that went ex-dividend on 29 September do not include those dividends. A suspended name enters the calculation at 0.00% while it does not trade.

In the two sectors with the largest index weights, KB Balhae Infrastructure (-5.20%) and SK REIT (-4.21%) fell sharply

In Infrastructure, KB Balhae Infrastructure, 21.3% of the sector, contributed -1.11pp, more than Macquarie Korea Infrastructure (78.7% of the sector, return -1.21%, contribution -0.95pp)

In Office, SK REIT (33.7% of the sector), whose 29 September ex-dividend drop is in its return, was the largest contributor at -1.42pp, and the sector fell 2.52% after rising in July and August

Samsung FN REIT (-9.82%, -1.03pp) and IGIS Value Plus REIT (-9.32%, -0.54pp) added to the fall

ESR Kendall Square REIT (53.1% of the sector) rose 3.53% and held Industrial to -0.06% while the other four names all fell

The other four returned -4.13% on a market-cap weighted basis

D&D Platform REIT (-9.14%) and Mirae Asset Global REIT (-11.22%) include their 29 September ex-dividend drops

Mastern Premier REIT, which had no ex-dividend date, fell 10.41%, and Koramco Life Infra REIT slipped 0.24%

All four Retail names rose, extending the sector's run to three months and its three-month return to 13.1%

The three names other than Lotte REIT (69.3% of the sector, 3.68%) rose 3.82% on a market-cap weighted basis, so the gain was broad

IGIS Residence REIT (Residential) rebounded 2.14% in August and then fell 2.10% in September, giving back almost all of that rebound

NH All One REIT (Diversified) fell 2.78% in September after -2.87% in August, leaving its 12-month return at -13.3%

In the minutes of the Bank of Korea Monetary Policy Board's 27 August meeting, released on 15 September, the five members who favoured raising the base rate (from 2.75% to 3.00%) shared two grounds: an outlook for core inflation to stay elevated for a while, and rising capital-region house prices and household lending

Three of them said the timing of further increases would be decided while monitoring economic indicators, leaving room for more hikes

In the same minutes, the one member who favoured a hold argued that the won's substantial appreciation had reduced the need to tighten in defence of the currency, that market rates were already high on expectations of rate hikes, and that it needed further confirmation whether demand-driven inflation was becoming entrenched

The 3-year KTB (month-end) rose 0.17pp from the end of August to 4.01% at the end of September, moving above 4%

SK REIT issued KRW 60bn of two-year public bonds at 4.818% on 22 September to repay maturing bonds; the rate was 1.83pp above its previous two-year bond (May 2025, 2.99%), slightly more than the 3-year KTB rose over that span (2.35% to 4.01%, 1.66pp)

Shinhan Alpha REIT issued KRW 40bn of one-year private bonds at 5.3% on 23 September to repay a KRW 40bn private bond (issued September 2025, 4.1%) that matured the same day; the rate rose 1.20pp, slightly less than the 3-year KTB over that span (2.58% to 4.01%, 1.43pp)

Lotte REIT refinanced its existing KRW 165bn secured loan and KRW 96bn of short-term bonds with a KRW 261bn three-year secured loan on 30 September; the fixed-rate KRW 130.5bn carries 5.10%, 1.35pp above the secured loan it took out in September 2024 (3.75%), slightly more than the 3-year KTB rose over that span (2.81% to 4.01%, 1.20pp)

The other KRW 130.5bn is floating, at the 3-month CD rate plus a 1.20pp spread

The 3-year KTB rise set against each REIT rate runs from the month-end of the earlier borrowing to the end of September, on month-end values; the borrowings' maturities (one to three years) may differ from the KTB's.

The US Federal Reserve raised the target range for the federal funds rate by 0.25pp to 3.75-4.00% at its 16 September Federal Open Market Committee (FOMC) meeting, with all 12 voting members in favour

The FOMC dropped the statement's wording that explained part of high inflation by supply shocks, and added a sentence saying the increase will support a timelier return of inflation to its 2 percent goal

In July the statement said inflation was above the goal in part reflecting supply shocks in certain sectors, including energy; this time it said only that inflation remains elevated

Fed Governor Michael S. Barr said in speeches on 23 and 29 September that further tightening is likely to be needed to bring inflation down to target in a timely fashion

Fed Governor Lisa D. Cook said in a speech on 28 September that the AI build-out appears to be adding inflationary pressure in the short term, postponing the return to 2 percent

She said the number and magnitude of any future adjustments will be informed by the economy's reaction to the policy actions so far and by the inflation and labor data

Over September the 2-year Treasury yield rose from 4.34% to 4.88% and the 10-year from 4.75% to 5.29%, the same 0.54pp, so short- and long-term rates rose together

As of the latest published month (2026-08).

The Cabinet on 29 September passed enforcement decree amendments that extend by one year the deadline for two tax breaks on unsold post-completion housing outside the capital region acquired by corporate restructuring REITs (CR-REITs)

Both the comprehensive real estate tax aggregation exclusion (Enforcement Decree of the Comprehensive Real Estate Tax Act) and the exclusion from additional corporate tax (Enforcement Decree of the Corporate Tax Act) now apply until 31 December 2027 instead of the end of 2026

The amendments follow up on the 3 August 2026 tax reform package, and the government said they would be promulgated and take effect on 1 October