LOTTE REIT to Raise KRW 125 Billion Using Icheon Outlet as Collateral [FN Market Watch]

[Financial News] LOTTE REIT plans to issue KRW 125 billion in publicly offered secured bonds backed by Lotte Premium Outlet - Icheon Branch. With total borrowings and its loan-to-value ratio (LTV) rising following the acquisition of new assets, the REIT is turning to high-quality real estate as collateral to raise funds.
According to investment banking (IB) industry sources on the 23rd, LOTTE REIT plans to issue KRW 125 billion in publicly offered secured bonds with an 18-month maturity, using Lotte Premium Outlet - Icheon Branch as collateral.
The bonds are scheduled to be issued on the 16th of next month, with bookbuilding slated for around the 5th of the same month. NH Investment & Securities, KB Securities, Korea Investment & Securities, Samsung Securities, Hana Securities, and KIWOOM Securities will serve as joint lead managers.
Lotte Premium Outlet - Icheon Branch is one of LOTTE REIT's key retail assets. Its purchase price was KRW 275.3 billion, while its latest appraised value is KRW 328.7 billion. Lotte Shopping has committed to lease it through March 2032, and its vacancy rate is 0%.
The issuance is seen as part of LOTTE REIT's ongoing use of high-quality real estate to secure financing. According to Korea Investors Service (KIS), as of the end of June, KRW 1.472 trillion, or 93%, of LOTTE REIT's KRW 1.579 trillion in total borrowings consisted of borrowings secured by real estate and corporate bonds.
LOTTE REIT's debt burden has grown during its recent asset acquisition process. In January, it acquired L7 Hongdae for KRW 265 billion, financing the purchase with a KRW 159 billion secured loan and KRW 107 billion in short-term notes. As a result, total borrowings rose to about KRW 1.6 trillion at the end of March, while the LTV climbed to 45.3% based on appraised value and 54.2% based on purchase price.
However, the value of its real estate holdings and the stability of its rental income are assessed as being high. As of the end of June, LOTTE REIT held 17 properties and one investment in shares of a class of stock. Its total assets stood at KRW 2.9026 trillion based on purchase price and KRW 3.5236 trillion based on appraised value.
In particular, Lotte Shopping has committed to lease a substantial portion of LOTTE REIT's retail assets, including department stores, outlets, and marts. KIS assessed that LOTTE REIT has secured stable cash flows, supported by the strong credit quality of its tenants and its lease structure. The credit rating of LOTTE REIT's secured bonds is at the 'AA-' level.
[email protected] Kim Hyun-jung Reporter