[Exclusive] DL Group to Pre-Sell 'D Tower Hyoje,' Launching a KRW 440 Billion PF Exit [Financial News Market Watch]

[Financial News] DL Group plans to pre-sell the office building 'D Tower Hyoje (DTOWER Hyoje)' in Hyoje-dong, Jongno District, Seoul, which is scheduled for completion in the first half of next year. The move is seen as a strategy to secure an investor before completion, reduce the burden of project financing (PF), and recover its investment early ahead of an expected increase in office supply in Seoul's central business district (CBD).
According to investment banking (IB) industry sources on the 21st, Hyoje PFV recently sent out a request for proposals (RFP) to select a sale adviser for D Tower Hyoje. DL E&C's private-sector business team and Hana Asset Trust's REITs business division are handling the practical work, with the adviser selection scheduled for this month.
The sale schedule has also taken shape. Following an analysis of the leasing market, the establishment of a sale strategy, the preparation of an investment memorandum (IM), and the operation of a data room, the company aims to invite bids in November, select a preferred bidder in December, and close the transaction in March 2027. In effect, the building's new owner will be determined before completion.
D Tower Hyoje is an office project being developed across two buildings at and around 98 Hyoje-dong, Jongno District. It will have seven basement levels and 15 floors above ground, with a site area of 6,833.80 square meters and a total floor area of 89,918.58 square meters.
Hyoje PFV is a special-purpose vehicle in which DL E&C invested in 2020 to secure a 66% stake. Hana Asset Trust currently holds 20%, while Samsung Securities owns 14%. The project site was acquired for KRW 207.3 billion from Dong Ryung, whose largest shareholder is Jo Hyeon-mun, the second son in the Hyosung Group family and a former Hyosung vice president.
The project was initially designed as an officetel development with more than 800 units, but its business direction was changed to offices as profitability deteriorated. The financial burden also grew during the process. The bridge loan amounted to KRW 309.6 billion, while cumulative financing costs have reached KRW 99.9 billion since October 2020. DL E&C's funding support limit has also risen to KRW 585 billion.
The outstanding PF loan balance stood at KRW 440 billion at the end of the first quarter this year. SC Bank Korea provided KRW 93.3 billion, while the National Credit Union Federation of Korea (NACUFOK) and 30 individual credit unions provided KRW 98 billion. Lotte Capital and KB Insurance each provided KRW 65.3 billion, among others. Hyoje PFV's financial liabilities totaled KRW 421.5 billion at the end of last year.
Meanwhile, real estate IB industry sources view the transaction from two perspectives: reducing DL Group's PF burden and testing the price of a newly built CBD office. With future office supply in Seoul expected to be concentrated in the CBD, a sale before completion could improve exit visibility before the new supply comes fully onto the market.
The key issue, however, is leasing. The price and yield applied by prospective buyers may vary depending on the master lease terms, the level of pre-leasing, and the pace of stabilization after completion. As vacancy rates for Class A offices in Seoul have recently risen, investors have become even more selective in choosing assets.
A real estate IB industry official said, "A sale before completion can bring forward the recovery of funds from a development project and reduce PF exposure. However, with CBD supply set to increase, the price will depend on how convincingly D Tower Hyoje can demonstrate the premium of a new building and the stability of its leasing."
[email protected] Kang Gu-gwi Reporter