KB부동산신탁

What is a land trust?

A trust product in which a trust company receives land in trust from a customer who lacks construction funds or development know-how and conducts the entire process of development projects, including establishing a development plan, procuring construction funds, managing construction, and selling and leasing buildings, and returns the profits generated to the landowner (beneficiary).

Types of land trusts
(categorized by whether they are funded by the trustee)

Classification	Borrowed	Managed	Main Features
Main Features	Borrowed	① Trust company finances business expenses ② Obligation to carry out the project as the property owner ③ Trust company risk is high ④ Trust fee rate is high -Negotiated within 5% of the revenue	①The business owner directly bears the responsibility for financing the project · Construction company cooperates in financing the project through construction completion responsibility and payment guarantees · The sales proceeds are used to pay project costs, but if there is a shortfall, the contractor or financial institution will bear the remaining project costs. · The trust company is the principal of licenses and sales contracts, etc. and performs only administrative tasks such as depositing and withdrawing funds ②The risk is relatively low for the trust company. (but it increases in case of contractor insolvency) ※ A trust business in which the trust company assumes the responsibility for construction completion to the lending financial institution is called a "responsible completion management-type land trust." ③ Fiduciary fees are relatively low · General Management Type : Negotiated within approximately 1% of the revenue · Responsible Completion Management Type : Negotiated within approximately 2% of the revenue
Managed	①The business owner directly bears the responsibility for financing the project · Construction company cooperates in financing the project through construction completion responsibility and payment guarantees · The sales proceeds are used to pay project costs, but if there is a shortfall, the contractor or financial institution will bear the remaining project costs. · The trust company is the principal of licenses and sales contracts, etc. and performs only administrative tasks such as depositing and withdrawing funds ②The risk is relatively low for the trust company. (but it increases in case of contractor insolvency) ※ A trust business in which the trust company assumes the responsibility for construction completion to the lending financial institution is called a "responsible completion management-type land trust." ③ Fiduciary fees are relatively low · General Management Type : Negotiated within approximately 1% of the revenue · Responsible Completion Management Type : Negotiated within approximately 2% of the revenue

Classification

Borrowed

Managed

Main Features

Borrowed

① Trust company finances business expenses

② Obligation to carry out the project as the property owner

③ Trust company risk is high

④ Trust fee rate is high
-Negotiated within 5% of the revenue

①The business owner directly bears the responsibility for financing the project
· Construction company cooperates in financing the project through construction completion responsibility and payment guarantees
· The sales proceeds are used to pay project costs,
but if there is a shortfall, the contractor or financial institution will bear the remaining project costs.
· The trust company is the principal of licenses and sales contracts, etc.
and performs only administrative tasks such as depositing and withdrawing funds

②The risk is relatively low for the trust company.
(but it increases in case of contractor insolvency)
※ A trust business in which the trust company assumes the responsibility for construction completion to the lending financial institution is called a "responsible completion management-type land trust."

③ Fiduciary fees are relatively low
· General Management Type : Negotiated within approximately 1% of the revenue
· Responsible Completion Management Type : Negotiated within approximately 2% of the revenue

Managed

①The business owner directly bears the responsibility for financing the project
· Construction company cooperates in financing the project through construction completion responsibility and payment guarantees
· The sales proceeds are used to pay project costs,
but if there is a shortfall, the contractor or financial institution will bear the remaining project costs.
· The trust company is the principal of licenses and sales contracts, etc.
and performs only administrative tasks such as depositing and withdrawing funds

②The risk is relatively low for the trust company.
(but it increases in case of contractor insolvency)
※ A trust business in which the trust company assumes the responsibility for construction completion to the lending financial institution is called a "responsible completion management-type land trust."

③ Fiduciary fees are relatively low
· General Management Type : Negotiated within approximately 1% of the revenue
· Responsible Completion Management Type : Negotiated within approximately 2% of the revenue

※ There may also be cases where borrowing-type and management-type are mixed. It is classified into sales-type and rental-type based on the disposal method.

* [Trust Fee Criteria] Please refer to the above trust fee rate. Detailed criteria are disclosed on our website (http://www.kbret.co.kr).

Structure of the Land Trust

Benefits of
Borrowing-type
Land Trust

1Landowners can develop their land without burdening themselves with funds
2Trust company handles all development-related tasks from start to finish
3Increased business stability as the business premises (trust real estate) is legally protected from the trustee's creditors by trust law

KB Real Estate Trust