“Bought Hannam THE HILL for 19 billion won, but took out 30 billion won in loans?” ... What happened to Ock Joo-hyun’s real estate

[Financial News] Legal experts say that funds raised using two properties as collateral may exceed 30 billion won, as the Hannam THE HILL penthouse in Seoul’s Yongsan District that singer and musical theater actress Ock Joo-hyun bought for 19 billion won has been put up for court auction. They estimate that interest payments on the high-interest loans alone will amount to at least 2 billion won a year.
On October 30, a video titled “Ock Joo-hyun’s 19-billion-won Hannam THE HILL Home: Why Did It Go to Auction?” was posted on the YouTube legal channel “Roel Law Firm” (Managing Attorney).
Lawyers Lee Won-hwa and Lee Tae-ho, who appeared in the video, cited excessive borrowing and high interest costs as the reasons Ock Joo-hyun’s home entered auction proceedings. They said the underlying cause of the auction was “ultra-aggressive leveraged investment undertaken with very little equity, along with high-interest costs that were difficult to bear.”
Last year, Ock Joo-hyun signed a contract to buy a 330-square-meter home at Hannam THE HILL in Seoul’s Yongsan District for about 19 billion won, and completed registration of the ownership transfer in April this year.
The two lawyers said that, given the strict restrictions on loans from first-tier financial institutions for high-priced homes, Ock Joo-hyun had borrowed through second-tier financial institutions, including capital finance companies, and moneylenders. They said she raised the purchase funds by using loans with relatively high interest rates on multiple occasions.
Land and a building in Sinsa-dong, Seoul’s Gangnam District, were also reportedly used to raise funds. The lawyers said Ock Joo-hyun obtained an additional secured loan based on the increase in the market value of the property, which she had previously built in the name of a one-person corporation, and pledged it as joint collateral with Hannam THE HILL.
The two lawyers estimated that loans secured against the Sinsa-dong property and Hannam THE HILL totaled more than 30 billion won. Assuming that high-interest loans, including loans at rates near the legal maximum, applied, they projected that interest payments would reach at least 2 billion won a year, or around 200 million won a month.
The downturn in the real estate market was also identified as a factor making it harder to secure funds. The lawyers said homes priced around 20 billion won are difficult to sell quickly because the pool of buyers with enough cash to purchase them is limited. As a result, they said, there could be constraints on selling the properties to realize investment gains or raise needed funds.
The income structure of the one-person entertainment agency operated by Ock Joo-hyun was also included in the analysis. The lawyers said her financial situation may have worsened as she faced monthly repayments of loan principal and interest totaling several hundred million won, while revenue could vary depending on performance schedules and other factors.
Ock Joo-hyun’s side, however, maintains that the debt arose in the course of pursuing a new business. Her agency previously said, “The debt arose in the course of pursuing a new business, and we are working to resolve it through attracting investment and M&A (mergers and acquisitions).”
In response to the agency’s explanation, Roel Law Firm raised the possibility that the debt was being addressed in a way different from a typical corporate merger and acquisition. The lawyers said Ock’s side may be seeking refinancing—bringing in new creditors to consolidate existing loans and extend their repayment deadlines—or negotiating with creditors to sell part of the real estate and repay the debt.
The lawyers warned that if the auction results in an actual sale, the equity already invested could also incur losses. They said, “If the auction proceedings are not withdrawn and proceed to an actual sale, the recent downturn in the high-end property auction market could lead to the property failing to sell or fetching a winning bid below its appraised value, putting even the equity previously invested in the Sinsa-dong building and other properties at risk.”
They added, “Ultimately, whether new investors can be brought in or refinancing negotiations can be successfully concluded will be the biggest turning point in resolving the situation,” explaining that the outcome of efforts to secure additional funds and negotiate debt adjustments would be important.
[email protected] Han Seung-gon Reporter