Koramco Asset Management Initiates Seongsu-dong Office Development with Kamco PF Normalization Fund [fnMarketWatch]

[Financial News] Koramco Asset Management announced on the 27th that it has acquired the Seongsu-dong 2-ga office development project, which was stranded due to Taeyoung Construction's workout, and will proceed with normalizing the project.
This project is a plan to construct an office and neighborhood living facilities with a total floor area of approximately 29,400㎡ (8,893 pyeong), spanning from 6 basement floors to 10 above-ground floors, in the area of 269 Beonji, Seongsu-dong 2-ga, Seongdong-gu, Seoul. Koramco has set up the 'Koramco Seongsu General Private Investment Company No. 158 Fund' for this development and will act as the project executor overseeing land acquisition, project planning, construction management, and asset management.
Initially, this site was a project that Taeyoung Construction was promoting through Seongsu TS PFV. Taeyoung Construction was expected to be the largest shareholder, contributing to the project cost and handling land acquisition and construction. However, before construction began, Taeyoung Construction declared a workout due to the inability to withstand the surge in interest rates and raw material prices during the bridge loan stage, causing the project to drift.
To normalize this site, Koramco first acquired the senior lenders' bonds to secure the project rights. Some unacquired lands were secured through public auctions, allowing the acquisition of the entire site. In particular, for the land acquired through public auctions, Koramco increased the project's viability by winning the bid at 1,065 billion won, about 60% of the initial appraisal price of 1,804 billion won, after repeated failures. Additionally, KCC Construction was recently selected as the preferred negotiating partner for the responsible construction contractor, and discussions on the construction contract are underway.
Koramco utilizes the 'PF Project Normalization Support Fund' created by Kamco (Korea Asset Management Corporation) to normalize this project. This fund was established to aid the normalization of PF projects that were either insolvent or at risk of insolvency during the severe PF crisis in 2023. Kamco contributed 500 billion won, and five delegated management companies (Shinhan Asset Management, IGIS Asset Management, Capstone Asset Management, KB Asset Management, and Koramco Asset Management) each raised over 100 billion won in private funds, creating a fund of about 1 trillion won. It was created to immediately reactivate insolvent projects that might be left unattended for a long time, minimizing unnecessary social and economic costs and stabilizing the construction market.
At that time, Koramco added 145 billion won in private funds to Kamco's contribution, creating a fund totaling 2,450 billion won. By forming the largest fund among the delegated management companies, Koramco was recognized for its project selection ability and management capacity as a real estate specialist management company.
The area around Seongsu-dong 2-ga (Yeonmujang-gil), the project site, is a 'new business district' where companies based on content, fashion, and IT such as Krafton, Musinsa, Gentle Monster, and MGRV are competitively acquiring assets to use as headquarters or workspaces. It is within walking distance of Seongsu Station and Konkuk University Station on Line 2, and with the planned expansion of transportation infrastructure such as the GTX-C (Wangsimni) and the Dongbuk Line, continuous value appreciation is expected in the future.
Kim Tae-won, Vice President of Koramco Asset Management's Domestic Real Estate Division, said, "The normalization of the Seongsu office development project will not only restart a halted site but also serve as a model case for PF normalization by significantly enhancing project viability through business restructuring," adding, "Koramco will strive to contribute to the revitalization of the region and the overall economy, in addition to achieving numerical success, as a responsible AMC combining expertise and efficiency." 


khj91@fnnews.com Kim Hyun-jung Reporter