Hanwha Group Secures 1.9 Trillion KRW Main PF for ‘Gangbuk COEX’ Seoul Station Northern Area Development

KB Kookmin Bank, IBK, Securities Firms Join Major Lenders
Hanwha Group Affiliates Provide Shares and Land as Collateral
Hanwha to Oversee Construction, Complete by 2029
Completion of Large-Scale MICE, Hotel, Office Complex Facilities

Hanwha Group has successfully secured project financing (PF) for the development project of the northern area around Seoul Station. Using the developer's equity and land as collateral, they have completed the recruitment of a lending consortium for a total project cost of 1.87 trillion KRW. Hanwha Group plans to commence full-scale construction and complete the 'Gangbuk COEX' by June 2029, five years from now.

Bird's-eye view of the Seoul Station North District Unit Planning Area

According to the investment banking (IB) industry on the 25th, Seoul Station Northern Area Development will raise 1.87 trillion KRW in PF funds from a financial lending consortium on the 28th. KB Kookmin Bank, Industrial Bank of Korea, and securities firms are known to have participated as lenders providing project funds. The loan maturity is five years, and based on collateral and repayment priority, the investment recruitment was divided into senior loans of 1.6 trillion KRW and subordinated loans of 270 billion KRW.

Seoul Station Northern Area Development is a special purpose company established by Korea Railroad Corporation (KORAIL) and Hanwha Group to develop idle land near Seoul Station. Hanwha Group affiliates such as Hanwha Total Petrochemical (40%), Hanwha Station (29%), Hanwha Engineering & Construction (29%), and Hanwha Hotels & Resorts (2%) have invested and hold 100% of the equity. Initially, Hanwha Estate also held 1% equity but transferred it to Hanwha Hotels & Resorts.

During the PF financing process, Hanwha Group provided its equity and land held by the developer as collateral. The shares provided as collateral amount to 5.22 million shares of the developer, with a collateral value evaluated at 2.244 trillion KRW. This project is being conducted through a managed land trust method by Woori Asset Trust.

With the completion of the PF financing, construction is set to accelerate. Hanwha, the holding company of Hanwha Group, will undertake the construction and plans to complete it by June 2029. They have also provided a performance completion guarantee agreement, agreeing to assume the PF debt if the building is not approved for use after completion within the deadline.

This project involves developing approximately 350,000 square meters of idle railway land behind Seoul Station (located at 122 Bongnae-dong 2-ga, Jung-gu, Seoul) and connecting it to Seoul Station for mixed-use development, then selling it to the private sector. Five buildings will be constructed and sold, equipped with large-scale MICE (Meetings, Incentives, Conventions, and Exhibitions) facilities including an international conference center, office spaces, hotels, retail facilities, and assembly facilities. The tallest building will be 38 stories above ground and 5 stories underground.

This groundbreaking marks 16 years since the project discussions began. The project discussions started in 2008 but were delayed for over 10 years due to the global financial crisis, demands for project feasibility re-examination by the Board of Audit and Inspection, and withdrawal of private developers. In December 2019, the Hanwha consortium was selected as the developer after Seoul City and landowner KORAIL redefined the development direction and guidelines.

An IB industry official commented, "Large-scale development projects near Seoul Station, such as the Seoul Station area development and the Hilton Hotel development across the street, are moving forward as financing is completed," adding, "Seoul Station is located in a strategic position connected to nationwide stations and Incheon Airport, which enhances the business viability of nearby MICE, hotel, and office facilities."