KB Star Reit

KB Star REIT, KB Financial Group's first listed REIT, was listed on the KOSPI in 2022 and is externally managed by KB Asset Management as a perpetual office REIT. At listing, its base assets were two overseas offices: North Galaxy Tower in Brussels, Belgium, and Samsung Europe HQ in Chertsey, UK.

North Galaxy Tower is administered by the Belgian building management authority with the Belgian Ministry of Finance as the actual occupant, while Samsung Europe HQ is leased long-term to Samsung Electronics' European subsidiary, and both assets were assessed as carrying low vacancy risk given their high-quality tenants and long-term leases.

The company subsequently added domestic prime offices sequentially to reduce its overseas concentration risk, securing three additional domestic landmark buildings starting with Citibank Center in Gwanghwamun in March 2024, followed by Signature Tower in Euljiro and Yeouido Finance Tower.

As of the end of June 2026, the portfolio comprised five office assets at home and abroad with a weighted-average occupancy rate in the high-90% range. Yeouido Finance Tower is regarded as an asset expected to generate stable rental income, with a vacancy rate below 1% as of the end of August 2025.

As a sponsor-type REIT backed by KB Financial Group affiliates, group companies secured more than 40% of shares from the early listing stage, and KB Securities, KB Kookmin Bank, and KB Capital have since maintained roughly 49% ownership, playing a supporting role in each capital-raising phase including rights offerings.

In terms of competitive positioning, JR Global REIT is often compared as a similarly structured office REIT anchored by overseas government or large-corporate tenants, while domestic office-focused REITs differ in portfolio diversification strategy.

KB Star REIT's consolidated revenue fluctuated modestly around the KRW 30 billion mark, moving from KRW 32.46 billion in 2022 to KRW 28.58 billion in 2023, KRW 29.78 billion in 2024, and KRW 30.39 billion in 2025.

Operating profit, by contrast, deteriorated for four consecutive years, swinging from a surplus of KRW 11.62 billion (operating margin of 35.8%) in 2022 to losses of KRW 21.43 billion (-75.0%) in 2023, KRW 26.84 billion (-90.1%) in 2024, and KRW 72.45 billion (-238.4%) in 2025.

This sharp deterioration in operating results appears to stem largely from accounting factors—fair-value losses and impairment charges on the properties held—rather than from any erosion in underlying rental income itself.

Net losses similarly widened from KRW 8.69 billion in 2022 to KRW 55.39 billion in 2023, KRW 31.79 billion in 2024, and KRW 99.41 billion in 2025, with owner-attributable figures showing the same trajectory.

As a result, owner equity declined every year, from KRW 514.33 billion in 2022 to KRW 435.76 billion in 2023, KRW 389.13 billion in 2024, and KRW 262.89 billion in 2025, while the debt ratio climbed rapidly from 95.6% to 125.5%, 177.2%, and 298.7% over the same period.

Operating cash flow (CFO), however, turned positive after 2022, moving from negative KRW 6.32 billion in 2022 to positive KRW 5.30 billion in 2023, KRW 13.73 billion in 2024, and KRW 13.78 billion in 2025, indicating that actual cash generation from rent collection remained relatively resilient.

This suggests that much of the deterioration in reported earnings originated from non-cash revaluation and impairment factors.

A similar pattern continued in the most recently disclosed 8th fiscal period (August 2025-January 2026), when KB Star REIT posted an operating profit of KRW 255 million on a consolidated basis for the 8th period but recorded a net loss of KRW 10.18 billion due to financial expense burdens; although the loss narrowed from the prior period, the company still proceeded with a large dividend payout while remaining in the red, and total consolidated liabilities rose to KRW 889.21 billion, with non-current liabilities surging from KRW 37.44 billion in the prior period to KRW 176.19 billion.

While Korea's listed REIT market is expanding across office, retail, and logistics asset types, REITs holding overseas office assets have faced elevated exposure to global high-rate conditions and asset revaluation pressure in recent years.

European commercial real estate appraisal practice is based on income-approach discounted cash flow methods that reflect future vacancy risk and re-leasing costs, meaning that rising rates and vacancy concerns can be reflected in asset values relatively quickly.

JR Global REIT is a similarly structured domestic listed REIT anchored by overseas government or large-corporate tenants, and amid growing market caution toward REITs backed by Belgian offices due to the chill in the European real estate market, both companies have moved to preemptively reduce borrowings through rights offerings in the high-rate environment.

Maintaining stable cash flow based on high-quality tenants such as the Belgian government and Samsung Electronics, but facing rapidly rising leverage burdens as higher interest rates coincide with declining asset values, is cited as a common challenge for this type of REIT.

Domestic office markets, by contrast, have shown relative resilience with low vacancy rates in core districts, which has been a backdrop for REITs including KB Star REIT to shift portfolio weight toward domestic assets.

Compared with domestic office-focused REITs, KB Star REIT still carries a relatively higher share of overseas assets, giving it a different risk-return profile from pure domestic office REITs. The KB Financial Group sponsor base, however, is considered a relative advantage in capital-raising situations.

In February 2026, the board decided on February 20 to carry out a rights offering, through which 49.35 million common shares were set to be issued, followed by existing-shareholder and general public subscriptions in April and the listing of new shares in May.

Proceeds were used primarily to repay high-cost short-term borrowings incurred in acquiring Citibank Center, Signature Tower, and Yeouido Finance Tower, and the company stated that repaying the high-cost short-term debt through the rights offering was expected to reduce interest expense by roughly KRW 6.6 billion, with annual interest expense estimated to fall from about KRW 12.3 billion to around KRW 5.7 billion.

KB Financial Group affiliates participated in the offering, including KB Capital's second capital call, executed four years after its first capital call of KRW 17.5 billion in July 2022, and as a result combined affiliate ownership was maintained at roughly 49%, comprising 26% for KB Securities, 13% for KB Kookmin Bank, and 10% for other affiliates.

The company states it has pursued diversification and reduced overseas concentration risk by successively securing three domestic landmark buildings, starting with Citibank Center in Gwanghwamun in March 2024, followed by Signature Tower in Euljiro and Yeouido Finance Tower.

North Galaxy Tower and Samsung Europe HQ are structured such that the Belgian building management authority and Samsung Electronics' European unit remain as tenants with roughly 10 and 15 years of remaining lease term respectively, with no early termination possible during the contract period, and the company notes that annual rent negotiations allow inflation to be reflected, which it considers an advantage.

However, given European commercial appraisal practice of pricing in revaluation pressure as lease maturities approach, whether renewal negotiations progress well ahead of maturity remains a key point to watch for future asset value trends.