[Exclusive] Emart to Close Seoul's 3 Major Core Branchs, Myeongil Store... Sale Process Underway for 400 Billion Won

Emart Myeongil Branch to Close Without Reopening
Buyer Capstone Asset Management to Pay Remaining Balance by End of Next Month
Gangdong-gu Office: "Emart Scheduled to Open in Godeok Biz Valley"

Emart is reportedly not considering re-entering the market through a sale-and-leaseback (selling assets and then leasing them back) method after selling its Myeongil branch. Instead, it is expected to open a new store near Godeok Biz Valley to attract nearby demand.

Amit Myeongil Branch exterior view. [Photo by Naver Map]

According to the distribution industry and Gangdong-gu Office on the 4th, Emart has confirmed that it has withdrawn plans to maintain the store through a sale-and-leaseback method after selling the Myeongil branch. Although Emart had shown intentions to continue operating at the Myeongil branch even after the sale, it decided to close the store as it shifted its focus to opening a location in the nearby Godeok Biz Valley.

An Emart representative explained, "As far as I know, we have decided not to proceed with a sale-and-leaseback after selling the Myeongil branch," adding, "The sale process is currently underway."

Capstone Asset Management has emerged as the buyer of the Myeongil branch. Capstone Asset Management is forming a blind fund and is currently negotiating the sale with Emart, with the payment date expected by the end of this month. Although the sale price is confidential, during last year's sale contract, Deloitte Anjin, the lead manager, reportedly suggested a desired price in the high 400 billion KRW range for the Myeongil branch.

Initially, Daewoo Construction was involved, but it is understood that Daewoo Construction only contributed a small amount to the fund. The developer is responsible for all matters related to the development plan, while Capstone Asset Management's blind fund acts as a financial investor (FI).

The land and building where Emart Myeongil branch is located are right in front of Godeok Station. It is a prime piece of land just a 2-minute walk from the station. The site area is 4,959.2㎡ (1,500.2 pyeong), and the total floor area (from 4 basement floors to 6 above-ground floors) is 27,912.8㎡ (8,443.6 pyeong). When Shinsegae acquired the Myeongil branch from Haitai Distribution for 40.5 billion KRW in 2000, it was considered one of Seoul's three key stores along with Gayang and Eunpyeong branches.

It is not yet known whether the land and building will continue to be used as commercial facilities. However, the developer is reportedly actively considering plans to convert it into a residential-commercial complex. Although residential facilities are generally not allowed in commercial zones, conditional residential-commercial complexes can be built according to detailed district unit plans. If the buyer uses the property as commercial facilities as before, they can continue negotiations with Gangdong-gu Office, but if they build a complex with more than 150 households or raise the building height above 50 floors, approval from the Seoul Metropolitan Government is required.

An investment banking (IB) industry official hinted, "After discussions with Gangdong-gu Office, the developer is currently preparing for approval talks with the Seoul Metropolitan Government."

If Emart opens near Godeok Biz Valley, it is expected to open around next year. The distance from the Myeongil branch, located right in front of Godeok Station, is about a 25-minute walk. Swedish furniture brand IKEA has confirmed its entry into Godeok Biz Valley. Cultural facilities such as CGV are also expected to move in. Especially in the areas around Myeongil-dong and Godeok-dong in Gangdong-gu, except for Homeplus Gangdong branch and Hanaro Mart, there are no large supermarkets, so the new Biz Valley location is expected to attract existing demand.

With the sale of the Myeongil branch, Emart has taken a step closer to achieving its goals of securing liquidity and strategically reallocating assets. In the metropolitan area, Emart is proceeding with the sale of Bucheon Jungdong branch and Myeongil branch. The plan is to improve financial structure by converting assets into cash while focusing on strengthening key stores through a strategy of selection and concentration.