[Funding] Shin Young Secures Additional Development Funds for Incheon Luwon City

Expected Perspective View of Incheon Luwon Jiwell City Prugio

[Asia Economy Reporter Lim Jeong-su] Shinyoung has raised 20 billion KRW in project financing (PF) funds for the Incheon Luwon City mixed-use development project. It is interpreted that additional funds necessary for the development project have been secured.

According to the investment banking (IB) industry on the 16th, Shinyoung received a loan of 20 billion KRW from a special purpose company (SPC) established under the management of Shinhan Financial Investment. The loan maturity is 2 years and 2 months, with the principal and interest repayment due in April 2023. Although the loan is structured as a bullet repayment at maturity, early repayment is allowed at any time.

To secure the funds, Shinyoung pledged dividends receivable from its affiliate developer, Shinyoung Luwon City Development Co., Ltd., and the project profits under the developer’s name as collateral. The SPC established for fund raising set a lien on the dividend account and the project profit account.

The raised funds will be used for the construction of the mixed-use development project "Luwon Ziwell City Prugio" being promoted in 491 Gajeong-dong, Seo-gu, Incheon Metropolitan City. Daewoo Engineering & Construction is in charge of construction, which began in April last year. The target completion date is January next year. This complex will consist of five buildings ranging from three basement levels to a maximum of 49 floors above ground, with a total of 778 units of a single exclusive area of 84㎡. A commercial facility of approximately 6,327 pyeong will also be established.

Shinyoung holds a 95% stake as the developer and acts as the asset management company (AMC) for this project. It is a self-operated business that raises funds based on its own credit to carry out the sales project. Asia Trust holds the remaining 5% stake in the form of preferred shares.

Shinhan Financial Investment, the lead manager, issued short-term bonds backed by the loan as the underlying asset to secure loan funds. In this process, it agreed to assume debt and provide liquidity support to the SPC in case of emergency. The short-term bonds are reissued every three months.

An industry insider said, "Since the sales performance of the project site is good and sufficient repayment stability measures are in place, there should be no difficulty in repayment."