Daewoo E&C expanded its business scope and laid the groundwork for entering new industries by becoming a shareholder through its equity investment in Mugunghwa Trust in July.
A Daewoo E&C official stated, "The real estate trust business is a Financial Services Commission-approved industry that has played a role in the efficient management of real estate assets and the revitalization of real estate investment," adding, "Its role is expected to become even more important in the future." Furthermore, the company believes that this equity investment will serve as an opportunity to strengthen its position as a 'construction developer.'
Completing the ‘Real Estate Value Chain’ through Synergy with Diverse Real Estate Development & Financial Networks
Mugunghwa Trust holds real estate trust assets worth 44 trillion KRW. Accordingly, it has various development networks including developers and financial institutions, providing the advantage of sourcing high-quality development projects. Additionally, it has affiliates and related companies such as Hyundai Asset Management, a comprehensive asset management company; K-REITs Investment Management, a real estate specialized management firm; and Mugunghwa Capital, a real estate-focused credit specialist company. This is expected to create synergy with the various types of PFV projects that Daewoo E&C is promoting. Collaboration is also ongoing in data center projects currently underway in Gangnam and Yongin, as well as in North American real estate development sectors.
Expansion of Trust-Based Urban Renewal Projects... Expected Enhancement of Order Competitiveness and Stable Project Execution Capabilities
Recently, as trust companies are expected to directly implement urban renewal projects, synergy between Daewoo E&C and Mugunghwa Trust is anticipated. Trust-based urban renewal projects refer to projects promoted through specialized real estate trust companies, which have shown activation centered around Yeouido and Mokdong last year and are now rapidly expanding to the Gangnam area. A key feature is that the real estate trust company holds the initiative and is responsible for everything from project management to financing.
At the end of June, an amendment to the Urban and Residential Environment Improvement Act, which grants special provisions to reconstruction and redevelopment projects promoted by trust companies, passed the National Assembly plenary session. If institutional support such as the establishment of a standard contract for trust-implemented reconstruction projects is provided in the future, trust-based urban renewal projects are expected to become even more active.
Mugunghwa Trust is preparing for the completion of the Incheon Bupyeong Cheongcheon 2 District redevelopment project, consisting of a total of 31 buildings and 5,050 households, scheduled for October this year. Upon completion and occupancy of the Cheongcheon 2 District redevelopment project, Mugunghwa Trust will become the only company in the industry with a track record of developing large-scale apartment complexes through trust-based redevelopment projects. Daewoo E&C expects a win-win situation as Mugunghwa Trust’s experience meets its own urban renewal project know-how and construction capabilities.
A Daewoo E&C official said, “Through this equity investment in the trust company, we will not only cooperate in urban renewal and public/private contract project fields but also pioneer new business areas in the mid-to-long term to discover future growth engines.”
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