Lotte Tour Development Secures 650 Billion KRW Funding Needed for Completion of Jeju Dream Tower Complex Resort

Jeju Dream Tower Complex Resort

[Asia Economy Reporter Choi Donghyun] Lotte Tour Development has succeeded in raising the final necessary funds of 650 billion KRW for the development of the Jeju Dream Tower Complex Resort.

On the 13th, Lotte Tour Development announced that it had received a Letter of Credit (LOC) for a loan of 650 billion KRW from Shinhan Financial Investment and Korea Investment & Securities, secured by the land and buildings of the Jeju Dream Tower Complex Resort. A Letter of Credit is a certificate guaranteeing that the lead securities firms will cover any shortfall during the syndication process with banks or other lenders, meaning that the funding process is complete upon issuance of the LOC.

With the issuance of this LOC, Lotte Tour Development has completed the financing of the project costs totaling 1.0768 trillion KRW, starting with a contract deposit of 100 billion KRW paid to China Greenland Group in 2015, followed by two installments of 150 billion KRW in intermediate payments last year, and now including the remaining balance and operating expenses. The total project cost of the Jeju Dream Tower Complex Resort, including the 40.9% stake held by the joint developer China Greenland Group, is approximately 1.6 trillion KRW.

To raise the project funds, Lotte Tour Development has conducted a series of financing activities, including issuing 40 billion KRW in convertible bonds in August 2017, a paid-in capital increase of 215.8 billion KRW in October 2018, and issuing 71 billion KRW in overseas convertible bonds in September last year.

With this successful fundraising, Lotte Tour Development has secured not only the remaining payments for the acquisition of land and buildings after completion but also the balance for interior construction and future operating funds, thereby completely dispelling some concerns caused by the COVID-19 pandemic.

The interest rate for the confirmed senior loan of 600 billion KRW was set at 4.05%, and the interest rate for the subordinated loan of 50 billion KRW was set at 5.95%, with a loan maturity of three years.

An investment banking (IB) industry official evaluated, “Despite the COVID-19 situation, the collateral value of the Jeju Dream Tower Complex Resort was solid, and as a key tourist attraction in Jeju with symbolic and future value, the financing was successfully secured.”

Lotte Tour Development recently received an appraisal of 1.205 trillion KRW from an appraisal firm for its 59.1% ownership of the Jeju Dream Tower Complex Resort, and in a business feasibility evaluation, Korea Ratings assessed the project value at 2.0383 trillion KRW.

Located at Nohyeong 5-way intersection, known as Jeju’s Myeongdong, the Jeju Dream Tower Complex Resort is the tallest twin building in Jeju with 38 floors (169m), and its total floor area is 1.8 times that of the Yeouido 63 Building, making it the largest landmark building in Jeju. Additionally, the 1,600 all-suite rooms and 14 restaurants with panoramic views of Hallasan Mountain and the Jeju sea are operated by Grand Hyatt.

Meanwhile, Lotte Tour Development stated that although the current construction progress rate of the Jeju Dream Tower Complex Resort is 96%, there is a possibility of some delay in completion due to disruptions in material supply and workforce management caused by the COVID-19 pandemic.

Kim Kibyung, Chairman of Lotte Tour Development, said, “Through the Jeju Dream Tower Complex Resort, we aim to create 3,100 high-quality jobs and pay about 268 billion KRW in Jeju Tourism Promotion Fund over the next five years,” adding, “We will do our utmost to prepare for the opening to fulfill our responsibility as a leading local company that takes the lead in regional coexistence.”

This content was produced with the assistance of AI translation services.