This article was published on April 15, 2025 at 5:42 p.m. on the ChosunBiz MoneyMove site.
Two logistics centers within the Incheon North Port hinterland have been put up for sale. These are assets that have suffered from project financing difficulties as they have been unable to find tenants since completion. Due to recent oversupply, investor sentiment in logistics centers is expected to worsen, leading to inevitable losses for the lenders.
According to the investment banking (IB) industry on the 15th, KB Real Estate Trust is pushing to sell a logistics center located in Wonchang-dong, Seo-gu, Incheon. The sale targets include the 'Incheon North Port F-3, 7 BL Logistics Center' owned by JaeSeng and the 'Incheon North Port C1 Cold Logistics Center' of Donghaeng Construction. The hoped-for sale prices for the two locations are approximately 120 billion won and 80 billion won, respectively.
Recently, the number of distressed assets in domestic logistics centers has rapidly increased due to oversupply. In particular, until last year, large-scale supply continued, and the vacancy rate of A-grade logistics centers in the metropolitan area has been steadily rising. Consequently, logistics centers that have not been able to find tenants since completion are failing to extend loan maturities, leading to sales efforts led by lenders.
The lenders for the logistics centers owned by JaeSeng include KB Real Estate Trust, BNK Investment & Securities, Wellix Capital, and BNK Asset Management. As of 2023, the total loan amount is approximately 84 billion won. The construction company, a KOSDAQ-listed firm SGC E&C, also loaned about 1.5 billion won for operational funds.
The lender group for the Donghaeng Construction logistics center consists of Lotte Card, Shinhan Capital, DGB Capital, Acuon Capital, and DB Capital. The loan interest rate ranges from 7.0% to 8.5%, with a total loan amount of approximately 52 billion won. The lender with the largest loan amount, Lotte Card (20 billion won), is proceeding with the sale through the trustee KB Real Estate Trust after requesting an appraisal.
Both logistics centers are cold storage facilities with 1 basement level and 7 above-ground floors. Recently, investor sentiment for ambient temperature logistics centers is reviving to some extent, while low-utility cold storage facilities are being overlooked. An industry official noted, 'Currently, the vacancy rates for logistics centers stand at 17% for ambient temperature and 38% for cold storage,' adding, 'The Incheon North Port hinterland is particularly noted as an area with severe oversupply in the country.'
In fact, transactions involving logistics centers in the North Port hinterland have been extremely limited. A recent transaction involved SGC E&C purchasing a cold logistics center from WOOSUNG Urban Development for 94.7 billion won in October of last year. However, this case saw SGC E&C take on debt after struggling to find tenants despite providing credit enhancement to the project developer.
Through global cold chain orders, a cold logistics center completed in 2023 has also failed to secure tenants, leading to an extension of the PF loan maturities until next year. A logistics center that Shinhan Asset Trust attempted to sell in the same area last year failed to find a bidder at a price even half of its initial appraisal value (67.8 billion won) compared to the initial appraisal price (116 billion won). If KB Real Estate Trust also fails to sell, it is expected that the junior lenders will not be able to recover their funds in full.
However, the industry views positively that major institutional investors and potential tenants are reviewing transactions focused on affordable distressed asset (NPL) assets located in the metropolitan area. An industry official stated, 'As overseas funds, including Starwood Capital Group and Warburg Pincus, are intensifying their investment activities in domestic logistics centers, changes in ownership are occurring,' adding, 'With supply of logistics centers decreasing from this year, there is a significant possibility of securing tenants.'