Targeting a Debt Ratio of 150%
Lotte Construction, ranked 8th in construction capability evaluation, is proceeding with the sale of its headquarters site. After using the building for 47 years since its completion in 1978, the company is reorganizing the office and pursuing asset efficiency.
On the 27th, Lotte Construction announced that it is exploring utilization plans for the headquarters, warehouse sites, and business land. The total asset scale held by Lotte Construction is about 1 trillion KRW, and among them, the headquarters building is planned to be sold. To this end, the company recently began the process of selecting a consulting service firm. Internally, various scenarios such as sale, development, and sales & leaseback are being analyzed.
The headquarters is located in Jamwon-dong, Seocho-gu, Seoul. Since being designated as a special district unit plan area in September 2023, development into residential facilities such as apartment complexes has become possible, causing the land value to surge. In addition to the locational advantage at the southern end of Hannam Bridge near the entrance of the Gyeongbu Expressway Hannam IC, the development potential could further increase once the government’s ‘Gyeongbu Expressway Underground Project’ is fully underway.
Besides this, Lotte Construction is also organizing idle assets scattered nationwide. Assets currently leased out, such as material warehouse sites in the metropolitan area and provinces, are also subject to sale. Through this, the company aims to reduce its debt ratio to around 150% by 2026 and additionally expand operating profit by over 100 billion KRW. Since 2022, Lotte Construction has resolved contingent liabilities of about 3 trillion KRW and currently holds deposits of approximately 1 trillion KRW.
A Lotte Construction official said, "We have improved our financial structure by strengthening financial stability and focusing on cash flow management," adding, "Through this consulting, we plan to establish optimal utilization plans such as asset sales."
Recently, the construction industry has been focusing all efforts on securing liquidity due to the economic downturn and high interest rates. Large construction companies are increasingly relocating their headquarters to suburban areas to reduce costs. In addition, Lotte Construction appears to have been influenced by the overall restructuring trend within Lotte Group.
Lotte Group, facing difficulties in core businesses such as construction, distribution, and chemicals, is accelerating financial structure improvement by organizing non-core businesses and assets across all affiliates. This month, it has disposed of Lotte Wellfood’s Jeungpyeong factory, Lotte Chemical’s Pakistan subsidiary, and Korea Seven’s ATM business. Last year, Lotte Rental was sold to the Hong Kong-based private equity fund Affinity Equity Partners. Furthermore, as part of efforts to reduce inefficient stores, Lotte Shopping is promoting the sale of Lotte Department Store Busan Centum City branch.
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