Songdo Development Revitalized... 'Jaipunggyeongchae' Secures 600 Billion Won Main PF Financing

PF Underwriters and Major Lenders Include Hana, Kiwoom, and Other Securities Firms
GS and Jeil Construction to Build Mini New Town-Scale Residential Complex
Sales Also 'Start'... Samsung Bio 2nd Campus and GTX Benefits

As the development of Incheon Songdo International New City gains momentum again, major local construction sites are accelerating their projects. Recently, GS Construction and Jeil Construction succeeded in raising 600 billion KRW in project financing for the large-scale residential complex 'Xi Punggyeongchae Granoble' being built in Songdo. With the realization of the Metropolitan Area Express Railway (GTX) Line B and expectations for Samsung Biologics' 2nd campus, the sales project is also expected to proceed smoothly.

Expected Perspective View of Songdo Xi Poongpyeongchae Grenoble

According to the investment banking (IB) industry on the 23rd, Songdo International Complex Development Co., Ltd. recently secured 600 billion KRW in project financing (PF) funds from a consortium of financial institutions. Securities firms such as Hana Securities, Kiwoom Securities, Yuanta Securities, and Kyobo Securities participated as PF lead managers and lenders. The maturity of the PF loan is 4 years and 10 months, maturing in December 2028. Although it is a bullet repayment at maturity, early repayment before maturity is possible.

Songdo International Complex Development Co., Ltd. is the project operator for the development of the second phase of revenue-generating land in the Songdo International Complex. It is constructing a large-scale residential complex equivalent to a mini new city on five lots, including 555-1 Songdo-dong, Yeonsu-gu, Incheon Metropolitan City. The funds raised this time will be used for construction costs of Songdo Xi Punggyeongchae Granoble and others. The project involves building a total of 3,270 households across 23 buildings, including apartments ranging from 84 to 208 square meters in exclusive area (2,728 units) with 2 basement floors to a maximum of 47 floors above ground, and officetels with an exclusive area of 39 square meters (542 units).

GS Construction and Jeil Construction were selected as the contractors responsible for the construction. Both construction companies agreed to complete the construction by October 2028, which is 4 years and 8 months from now. They also provided a completion guarantee agreement, which holds the contractors responsible for debt repayment on behalf of the project operator if the construction is not completed as designed or if usage approval is not obtained within the deadline. The project is scheduled to officially commence construction in February.

The PF lead manager group set the same priority level for all loan repayments when raising the project funds. This contrasts with most past PF loans, which were divided into senior, mezzanine, and junior ranks for collateral repayment priority. An IB industry official said, "Due to incidents such as Taeyoung Construction's corporate financial restructuring (workout), financial companies are quite reluctant to provide PF loans," adding, "If the loan repayment priorities are divided, it becomes difficult to raise PF loans, so the entire loan was set at the same priority level."

Sales will proceed simultaneously with the start of construction. It is expected that residential demand will increase significantly once the Samsung Biologics 2nd campus, currently under construction nearby, is established. Additionally, with the realization of GTX Line B, the transportation conditions, which were considered a weakness of Songdo, are expected to improve significantly. An industry insider said, "With various themed facilities such as waterfronts, waterside parks, and mini Venice (canals) nearby, along with commercial facilities like Homeplus, Hyundai Premium Outlet, and Triple Street, we expect the sales to be successful."