Homeplus enters scrutiny as FSS investigates real estate fund rent crisis

As the rent payment crisis of Homeplus, which applied for corporate rehabilitation procedures, has become a reality, the Financial Supervisory Service has begun to check the status of real estate funds based on the Homeplus site. These funds are products that receive rent from Homeplus and later seek profit through the sale of the site.

MBK Partners, the largest shareholder and private equity fund operator, has expressed a willingness to prioritize rent payments, but market concerns are growing. Some Homeplus branches did not pay rent last week. If Homeplus fails to pay rent, investors will not receive dividends, and the fund's revenue will decline. However, industry insiders said that delays in rent payments by retailers are common and that it is not yet a stage to broaden the interpretation.

According to the financial investment industry on the 12th, the Financial Supervisory Service sent an official letter to asset management companies directing them to submit the status of the real estate funds containing the Homeplus site. The inspection was prompted by the increasing risk of Homeplus being unable to pay rent as it enters corporate rehabilitation procedures and the potential complications in the process of selling the site.

In fact, last week, the Jeonju Hyoja branch of Homeplus did not pay rent to its landlord. While the financial investment industry does not see this as a major concern, the problem is that the tenant is Homeplus. Homeplus is currently undergoing corporate rehabilitation procedures.

Real estate public offering funds related to Homeplus are estimated to be worth 174 billion won in the market alone. If private equity funds are included, the scale is expected to increase further.

The structure of these products is similar. They involve raising funds from individual investors and loans from financial institutions to purchase Homeplus stores. The purchased stores are leased back to Homeplus, and the rental income such as monthly rent generated from this is distributed as dividends to investors. Later, the stores will be sold to others for price gains.

One of these funds is the 'Egis Core Retail Real Estate Investment Trust No. 126' managed by Yookyoung PSG Asset Management. This fund contains three Homeplus locations (Ulsan branch, Gumi Guangpyeong branch, and Siheung branch), with a net worth of 93.7 billion won. Yookyoung PSG Asset Management explained while designing the product that 'large supermarkets have been recognized as alternative products for investors who prefer stable dividends' and that 'Homeplus, as the responsible tenant and the second-largest operator in the industry, holds excellent crediting ability, which enhances lease stability.'

However, on the 4th, after Homeplus applied for corporate rehabilitation procedures, such explanations became meaningless. The credit rating of Homeplus's asset-backed securities dropped to 'D,' indicating default. The recent three-month revenue of this fund is 0.8%.

The situation is the same for the 'Egis Core Retail Real Estate Investment Trust No. 126' mentioned earlier, which contained the Jeonju Hyoja branch. With a net worth of 61.1 billion won, No. 126 has not distributed dividends since March 2023, facing a dual burden of 'debt.' No. 126 has extended its loans during a high-interest period without selling its stores, which has resulted in it having to use all the rental income received from Homeplus to repay the interest on financial institution loans. The recent three-month revenue of this fund is 0.89%.

MBK Partners clarified that the possibility of unpaid rent is low. They explained to Homeplus's creditors that 'rent has the priority for repayment like salary and taxes.'

However, skepticism in the market remains. If the rent occurs after the initiation of corporate rehabilitation procedures, the lease contracts established before this may not be recognized as public interest bonds.

A representative from an asset management company noted, 'Once we enter the rehabilitation stage, the number of stakeholders increases,' and added, 'A conclusion about whether rent can be collected is yet to be reached.'