Losses at 4 Sites... LH's PF Project Losses Near 100 Billion Won

Korea Land and Housing Corporation (LH) has reportedly incurred losses close to 100 billion won in its project financing (PF) business.

[Image source=Yonhap News]

According to data disclosed by Jang Cheol-min, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, the losses from four ongoing PF projects by LH have been calculated at 96.94 billion won.

PF projects are typically public-private joint real estate development projects where land is supplied to private developers selected through public bidding, and funds are raised under the responsibility of a project company jointly established by public and private sectors to carry out the project.

Among LH’s PF projects, LH invested 93.4 billion won in Alpha Dome City in Pangyo, Seongnam, but the amount recovered so far is only 8.92 billion won. The current value (equity valuation) is 300 million won, resulting in a loss of 84.18 billion won.

LH invested 6.3 billion won in Juneve in Dongbaek, Yongin, Gyeonggi Province, and 4.8 billion won in Bichaenuri at the Seoul Southern Correctional Facility, but it appears that no amount has been recovered. Juneve and Bichaenuri seem unlikely to recover investments easily due to bankruptcy and termination of business agreements, respectively.

For Daejeon Expo Smart City, LH invested 9.4 billion won and incurred a loss of 1.66 billion won.

LH explained that after the 2008 financial crisis, similar to Lehman Brothers, the real estate downturn, prolonged project periods, and unsold units increased financial costs and worsened project profitability. LH also stated that there are currently no new investments related to PF.

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