[Exclusive] Kiwoom Securities Acquires Hanatour Gongpyeong-dong Headquarters for 117 Billion Won

Hana Tour Hit Hard by COVID-19, Liquidity Crisis Expected to Ease
Price Slightly Up Compared to Initial Sale Attempt

Kiwoom Securities Building, Yeouido, Yeongdeungpo-gu, Seoul

[Asia Economy Reporter Minwoo Lee] Kiwoom Securities has decided to acquire the Hana Tour Seoul Gongpyeong-dong building for 117 billion KRW. Hana Tour, which was facing a liquidity crisis, will be able to catch its breath to some extent.

According to the investment banking (IB) industry on the 26th, Kiwoom Securities decided to purchase Hana Tour's headquarters building (Hana Building) in Gongpyeong-dong, Jongno-gu, Seoul, for 117 billion KRW. Kiwoom Securities and its real estate investment specialized affiliate Kiwoom ENS will participate in a fund established by Kiwoom Asset Management to acquire the property. It is reported that about 70 billion KRW of the acquisition amount of 117 billion KRW was raised through Shinhan Bank. The balance payment will be made on the 27th to complete the transaction.

This sale involved only the lower floors (basement 2 to 6th floor) of the Hana Building, which has 2 basement levels and 12 floors above ground. The remaining upper floors (7th to 12th floor) are owned by Ewha Asset Management. Earlier this year, Hana Tour selected Citycore DMC as the preferred negotiator and attempted to sell its portion of the Hana Building, but the deal ultimately fell through. However, with this sale, they were able to sell at a slightly higher price of 117 billion KRW compared to the initially set price of 94 billion KRW during the first sale attempt. An industry insider familiar with the transaction hinted, "Although the sale failed once, the real estate prices in the area have risen since the beginning of the year, allowing it to be sold at a higher price."

The utilization plan for the Hana Building is still undecided. Kiwoom Securities is already pursuing reconstruction of its old Yeouido headquarters, which is over 40 years old, but since the Hana Building is located far from Yeouido, it does not plan to use it as a headquarters. A Kiwoom Securities official explained, "We decided to acquire it because we judged it to be a good property," adding, "We do not plan to use it as a securities firm headquarters and will explore utilization plans through future discussions."

As a result, Hana Tour, which was hit hard by the COVID-19 pandemic and faced a liquidity crisis, can now breathe easier. In early June, Hana Tour sold the Tmark Hotel in Myeongdong, Seoul, to Aegis Asset Management for 95 billion KRW. By disposing of the Hana Building as well, it secured about 200 billion KRW in cash. Due to the severe downturn in the travel industry caused by COVID-19, Hana Tour recorded consolidated sales of 109.6 billion KRW and an operating loss of 114.9 billion KRW last year, marking its worst performance. The poor performance has continued this year amid ongoing COVID-19 spread. It posted losses in both the first and second quarters, recording sales of 15.9 billion KRW and an operating loss of 65.6 billion KRW in the first half of this year. Sales decreased by 83.1% compared to the same period last year, and the deficit increased by 5.1%.