Lotte Shopping and Hotel Lotte Sold Shares in Lotte World Tower and Mall

Complete Sale to Lotte Mulsan... Each Worth 830 Billion and 550 Billion Won
Securing Cash Liquidity and Improving Financial Structure

[Asia Economy Reporter Jo In-kyung] Lotte Shopping and Hotel Lotte have each sold all their shares in the Lotte World Tower and Mall in Jamsil, Seoul, which they had held, to expand new businesses and improve their financial structures.

On the 22nd, Lotte Shopping announced that it sold a 15% stake in Lotte World Tower and Mall to Lotte Property & Development for about 830 billion KRW. Hotel Lotte also transferred its 10% stake to Lotte Property & Development, securing 550 billion KRW in cash.

This share sale appears aimed at clearly distinguishing the business areas of each affiliate and securing liquidity for Lotte Shopping and Lotte Hotel, which had been sluggish since COVID-19. In the case of Lotte Shopping, it invested 30 billion KRW last month to acquire shares in the used goods trading platform ‘Junggonara’ to strengthen its e-commerce business, and it is showing strong enthusiasm for the ongoing acquisition of eBay Korea, valued at around 4 trillion KRW. The funds secured are expected to be used for mergers and acquisitions (M&A) and other purposes.

Earlier, in November last year, Lotte Shopping raised funds for new business investments by transferring five stores, including Lotte Department Store’s Jungdong branch, to Lotte REITs and leasing back the real estate. Including the proceeds from this Lotte World Tower and Mall sale, the total funds secured by Lotte Shopping amount to 1.56 trillion KRW. A Lotte Shopping official explained, "We decided to sell the shares to resolve the worsening financial burden and secure new investment capacity."

Hotel Lotte also stated, "We decided to sell to secure cash liquidity and improve our financial structure." Since COVID-19, the duty-free business, which had been a cash cow, has been sluggish, expanding losses and causing financial difficulties. Some of the funds secured from this share sale will be prioritized for loan repayment.

For Lotte Property & Development, it has acquired all the shares of Lotte World Tower and Mall that had been dispersed among affiliates, now owning 100%. The company plans to issue additional corporate bonds to finance the 1.38 trillion KRW share purchase.

A company official said, "With this share acquisition, we can achieve stable profit generation and rapid decision-making tailored to the rapidly changing market environment, enabling proactive activation of on-site operations and responsible management." He added, "We have laid the foundation to strengthen our capabilities as a real estate and asset management specialist company based on the future asset value of Lotte World Tower and Mall."