Emart Secures 1.5 Trillion PF Financing for Magok Commercial Land Development

[Asia Economy Reporter Lim Jeongsu] Emart sold a large-scale commercial land in the Magok district of Seoul, which was originally planned as the site for Starfield, in the first half of this year. Magok CP4PFV, the new owner of this land, secured approximately 1.5 trillion KRW in project financing (PF) funds to carry out the development project. Domestic banks and securities firms participated as major investors in the PF, and Taeyoung Construction was selected as the contractor.

According to the investment banking (IB) industry on the 25th, Magok CP4PFV, a corporation established for the purpose of project implementation, recently received PF loans worth 1.5 trillion KRW from a consortium of banks and securities firms.

The maturity is 3 years and 7 months, with principal repayment due in March 2025. Although the loan is structured as a bullet repayment at maturity, early repayment is also possible. However, if the entire amount is received from the sale of the real estate, early repayment of the loan is mandatory.

The PF loan was executed in two parts according to collateral and repayment priority: senior loans of 810 billion KRW and subordinated loans of 690 billion KRW. The lending consortium reportedly included many banks such as IBK Industrial Bank, Shinhan Bank, Kookmin Bank, and Nonghyup Bank.

The funds raised will be used to construct office facilities and retail spaces within the special planning zone (CP4) of the Magok Urban Development Project area, located at 727-769 Magok-dong, Gangseo-gu, Seoul. The site covers an area of 39,050 square meters (approximately 11,833 pyeong).

Taeyoung Construction, the contractor, bears the responsibility for completion with approval from administrative authorities within 41 months after the PF loan execution. If approval is not obtained within the deadline, the project developer will also be jointly liable for the PF debt.

Once the development project is completed, Emart Traders and others are expected to move in. Emart originally purchased this site from SH Corporation (Seoul Housing and Communities Corporation) in 2013 for 243 billion KRW for the purpose of retail and office development, and sold it to Magok CP4PFV for 815.8 billion KRW in the first half of this year, about seven years after the purchase. Emart stated that the reason for selling the land was to improve financial soundness and secure investment funds.

An IB industry official said, "The site is located right in front of Magok Station on Subway Line 5, making it a core area of Magok with excellent transportation accessibility," and added, "Due to favorable office and transportation conditions, office sales are expected to proceed smoothly."