Korea Military Mutual Aid Association to Sell ‘27-Hole Lock-in Gimhae Golf Course’ Through Negotiated Contract [fn Market Watch]

[Financial News] The sale of a 27-hole golf course in Jinye, Gimhae, in which the Korea Military Mutual Aid Association is the largest investor, has switched to a negotiated contract after two failed auctions. The asking price has also been cut from 9.3 billion won to 8.3 billion won per hole. Once the sale is completed, the association will recover funds that have been tied up for nearly 20 years and secure liquidity.
According to investment banking (IB) industry sources on the 4th, the bulk sale of the real estate and business rights for the 27-hole golf course designated as a Gimhae urban planning facility, conducted through Onbid, the Korea Asset Management Corporation’s electronic asset disposal system, switched to a negotiated contract after failing to sell at auction twice, on September 3 and 17.
The asking price was reduced by about 26.9 billion won, from 251.495 billion won to 224.591 billion won. The price per hole fell from about 9.3 billion won to 8.3 billion won. Applications to participate in negotiated discussions are open through the 7th, and bids are scheduled to be opened on November 6.
DR & AJU handled the advisory work, including calculating the sale price. Samjong KPMG is advising on the sale. The seller, Lock-in Gimhae Lespo Town Co., Ltd., is a special-purpose corporation (SPC) funded by the Korea Military Mutual Aid Association (46.37%), Gimhae City (37.86%) and Korailtech (15.77%).
Real estate IB industry sources are watching to see whether the sale goes through, given that the price expectations have been lowered. While recent transaction prices for golf courses on the outskirts of the Seoul metropolitan area and in provincial areas have ranged from 7 billion to 9 billion won per hole, this property is an unfinished asset with civil engineering work about 80% complete. The need for the buyer to cover the remaining construction costs and bear the risks of opening the course is a factor affecting the price.
A real estate IB industry source explained, “Because the buyer would be acquiring the business rights along with the remaining construction work, rather than a completed golf course, a discount to account for the additional investment is unavoidable,” adding, “The low 8-billion-won range per hole is a price that could be considered given the underlying demand from Busan and Changwon.”
The sale includes a 1,442,093-square-meter site and facilities, including a clubhouse, with a total floor area of 4,112 square meters. The property is being developed as 27 holes across three courses. Industry sources say it is being built to a standard that could accommodate Korea Ladies Professional Golf Association (KLPGA) tournaments.
The Gimhae Complex Sports and Leisure Facilities Development Project began in 2005 as a private-investment project offered through a public call for proposals. It combines an urban development project with sports facilities, including a golf course, athletic fields and an access road. The urban development portion was partially completed last August, and the entire project is targeted for completion in December next year.
For the Korea Military Mutual Aid Association, recovering its long-term investment is key. If the sale goes through, it can secure funds to recoup development costs and recover long-frozen loans. This would increase the liquidity available for members’ salary-savings payouts and new alternative investments. If plans to develop the remaining reserve land for 18 holes are finalized, the value of the remaining assets could also come into sharper focus.
[email protected] Kang Gu-gwi Reporter