Bank and Insurance PF Syndicated Loan, First Loan to Euljiro Office Project Site

The bank and insurance PF syndicate loan consortium announced on the 2nd that it has processed its first loan for an office renovation and expansion site in Euljiro, Seoul. The consortium has completed all loan assessments for the project site and plans to execute the loan around mid-month as requested by the borrower.

This first syndicate loan falls under one of four types (auction funds, self-sale project acquisition funds, non-performing loan investment, temporary liquidity distressed projects) and is an auction fund loan. It refers to a loan provided to a new operator who intends to proceed with a new PF project by winning the bid on a site where the existing lender had conducted auction or public sale through collateral enforcement.

The consortium regards this syndicate loan as significant in contributing to the normalization of projects through 'public sale,' a representative measure for resolving non-performing PF projects. In particular, it highlights the provision of funds for the normalization of long-unresolved downtown office redevelopment projects.

During the public sale process, the consortium notes that the subordinated lenders of the existing operator enhanced project viability by converting existing loans into equity, which facilitated a smooth public sale. This is expected to serve as a model case for future PF project normalization. Additionally, senior and mezzanine financial institutions such as savings banks and capital companies, which had difficulties recovering loans from the existing operator, were able to recover their loans normally, alleviating concerns about non-performance.

The new operator is also evaluated to have secured restructuring momentum through the syndicate loan. The project’s viability has improved as additional floor area ratio became available following recent changes to Seoul City's maintenance plan.

The consortium stated, "Since its launch, the syndicate loan has engaged in loan consultations with various demanders, and currently, other projects are undergoing loan processing procedures such as credit review after preliminary consultations with prospective borrowers. We expect that continued syndicate loan issuance will contribute to fulfilling its role as a private funding source for PF normalization."