The construction industry is currently conducting multiple development projects on the site of the large supermarket 'Homeplus,' which has entered corporate rehabilitation proceedings. Homeplus's largest shareholder, MBK Partners, has been selling off profitable stores to repay acquisition financing, prompting real estate companies to purchase the supermarket buildings and land for development. Most of the projects involve developing mixed-use complexes. However, due to a downturn in the real estate market, some of these development projects are reportedly stalled or struggling to set a sales date.
According to industry sources on the 6th, MBK has confirmed the sale of over 20 stores, including those in Ansan, Daejeon Tanbang and Dunsan, Daegu, and Busan Haeundae and Yeonsan, either closing them or disposing of them through the sale-leaseback (S&LB) method after acquiring Homeplus. It has also been reported that the establishment of real estate funds and real estate investment trusts (REITs) based on Homeplus stores was part of an asset liquefaction strategy. The approximately 4 trillion won generated from these efforts is said to have been used to repay the acquisition financing incurred through leveraged buyouts (LBO).
An investment bank (IB) official explained, "I understand that they sold the land and buildings where the stores are located to pay off the loans incurred during the acquisition." MBK Partners refuted this, stating, "The sale of the stores was not used to recover the investment of the major shareholder."
Most of the stores sold by Homeplus are being developed as mixed-use complexes. The Bucheon Homeplus Sang-dong store, which ranks among the top five stores in nationwide sales, will also be transformed into a mixed-use complex. Lotte E&C plans to develop this site into a mixed-use complex with 1,853 units, consisting of 7 basement levels and 47 above-ground floors. Construction is scheduled to begin next year, with completion expected in 2029. A Lotte E&C official stated, "Currently, the closure process is underway, and once the closure is completed in the second half, it should be possible to set the sales date."
In the case of the Homeplus Haeundae store, it will also be developed into two buildings, one with 8 basement levels and 54 above-ground floors, and another with 8 basement levels and 50 above-ground floors. The Homeplus Haeundae store was purchased by the Eastern Investment Development Consortium for approximately 400 billion won in June 2022. SK Eco Plant is the construction company. A representative from SK Eco Plant stated, "Demolition work has been ongoing since last November, and I understand that the main construction will begin around May to June this year."
Some of the land sold by Homeplus is facing slow development. With the crisis over real estate project financing (PF) escalating, development projects are either derailed or delayed. The Busan Homeplus Yeonsan store was expected to feature Taeyoung Construction's 'Yeonsan The Class Desian.' The mixed-use complex, comprising 522 units within 3 basement levels and 39 above-ground floors, sold the land with the intention of Homeplus returning to this site once completed. However, Taeyoung Construction's project is currently stalled. A representative from Taeyoung Construction explained, "We received a proposal from the developer and reviewed it, but no actual progress has been made."
Development projects for the Mid-Delivery Store of Homeplus have also been halted. Originally, this site was planned for the Seoul Metropolitan Area's Transit Station Area 2030 Youth Housing project. However, due to opposition from local residents, Homeplus agreed to develop a knowledge industry center in partnership with Mirae Asset Securities and signed a business agreement, but the real estate market's slump has stalled the project. A representative from Mirae Asset Securities noted, "We signed the agreement and were in the process of progressing the project at that time, but due to rising construction costs and other factors, there hasn't been any ongoing progress."
Developers cite the real estate PF crisis and local residents' complaints about the disappearance of commercial facilities as reasons for the delays in some supermarket site development projects. A representative of one development company remarked, "Even if we try to develop due to poor real estate conditions, it remains uncertain whether we can make sales or if the project will be viable. Additionally, there is significant resistance from nearby residents regarding the disappearance of the supermarket, often resulting in slow progress of projects."
For similar reasons, the trust company that operated supermarkets acquired from Homeplus is also experiencing challenges in recouping funds. KB Real Estate Trust has been trying to sell the 'Homeplus Pyeongchon Store' in Anyang since 2022. However, it has failed to find a buyer, and thus extended the operation period of the REIT that holds the Homeplus Pyeongchon Store as an asset until 2027.
However, recent reports suggest that Homeplus has not actively pursued additional store sales. An IB official said, "Up until 2 to 3 years ago, Homeplus was proactive in selling stores and asset liquefaction attempts, but recently, it seems that they have focused on the separate sale of Homeplus Express."
With Homeplus entering corporate rehabilitation proceedings, it seems that the development of new store sites will also be halted for the time being. As the corporate rehabilitation process begins, asset efficiency plans such as store sales will be determined through the creditors' council. Consequently, additional store sales and asset liquefaction will be difficult without the creditors' agreement.
A financial sector official holding Homeplus bonds stated, "After the creditors' council is notified of the composition, we will schedule the council meeting, and decisions regarding additional asset sales will be made there." This official added, "However, regarding Homeplus, considering the abnormally fast pace of the initiation of the rehabilitation proceedings in court, there is a strong request for a slowdown in debt enforcement, suggesting that instead of aggressive asset sales, extending loan periods is more likely."