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Shinsegae Property to self-fund joint bid with IGIS for IFC Seoul No support expected from Shinsegae Group’s other affiliates

Translated by Ryu Ho-joung 공개 2022-02-17 08:12:08

이 기사는 2022년 02월 17일 08:07 더벨 유료페이지에 표출된 기사입니다.

Shinsegae Property, the real estate investment and development arm of South Korean conglomerate Shinsegae Group, is likely to fund its joint offer with IGIS Asset Management for the mixed-use complex International Finance Center Seoul on its own with no support from the conglomerate’s other affiliates.

On Tuesday, a Shinsegae Group representative declined to comment on Shinsegae Property’s partnership with IGIS to jointly bid for IFC Seoul because of a non-disclosure agreement, but said if the IGIS-led consortium wins the bidding war, “Shinsegae Property will fund its part of the acquisition on its own”.

IFC Seoul, which was put up for sale by Toronto-based Brookfield Asset Management, comprises three office towers, the five-star Conrad Seoul Hotel and IFC Mall with an area of 85,400 square meters.

Other bidders in the race include Mirae Asset Maps, Koramco REITs & Trust, ARA Korea and Mastern Investment Management.

The multi-use complex, located in the city’s major financial district Yeouido, is estimated to be worth more than 4 trillion won ($3.3 billion). Given this and debt financing usually accounting for 60% of acquisition costs, Shinsegae Property may need to finance some of the 1.6 trillion won equity portion.

However, its cash position looks weak. Shinsegae Property held approximately 50.5 billion won of cash and cash equivalents at the end of 2020 on a consolidated basis. Investment properties, whose value stood at about 1.7 trillion won, accounted for more than half of the firm’s 2.6 trillion won total assets.

Last year Shinsegae Property injected 45 billion won into Starfield Suwon, 9 billion won into Shinsegae Hwaseong and 5 billion won into Starfield Changwon, and bought land in Namyangju, Gyeonggi Province, from its parent company Emart for 75 billion won. It is said that the company is also considering a purchase of US winery Shafer Vineyards.

Shinsegae Group has explicitly ruled out the possibility of financially supporting its real estate investment unit, probably because of an increase in financial leverage of Emart after the more than 3 trillion won purchase of eBay Korea last year.

Many industry watchers expect Shinsegae Property to use its investment property assets to raise money necessary to fund the offer as its parent company did. Emart took out big loans by pledging its stores as collateral to fund the acquisition of eBay Korea. (Reporting by Seon-ho Kim)
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