KB Securities said it signed a memorandum of understanding (MOU) on the 3rd with the Korea Developers Association (Developers Association) to create a "real estate development equity fund" aimed at advancing Korea's real estate development finance system and expanding housing supply.
The partnership was arranged to provide practical support to small and midsize developers that are struggling to secure early-stage funding amid recent project financing (PF) system reforms and a squeeze in bridge loans. The Developers Association, which has built strong expertise in real estate development, and KB Securities, which has a track record in arranging large landmark PF deals, plan to establish a win-win cooperation model.
Responding to the government's "Aug. 13 housing supply policy," the two sides plan to help cover equity for quality business sites in the Seoul metropolitan area and reduce reliance on high-interest loans to strengthen the financial structure of real estate development projects.
The launch of this fund is the first outcome of the "financial primer fund" pledged by Chair Kim Han-mo when taking office in February. It was prepared to restore business sites that have stalled despite having location and approvals in place, due to a lack of initial capital.
The association plans to mobilize its network of about 1,000 member companies and about 2,200 registered developers to identify strong business sites. KB Securities will support credit screening functions and operating infrastructure to facilitate smooth ground-breaking and project stabilization.
Developers Association Chair Kim Han-mo said, "The creation of this fund not only meets the public objective of expanding the nation's housing supply, but will also lay the groundwork to open new opportunities for member companies and young talent aspiring to become developers," adding, "Building on the successful settlement of the fund, we will steadily create additional primer funds and, without setbacks, establish the foundation for a mutual aid association, a long-held goal of the industry."
Moon Sung-chul, head of group at KB Securities, said, "Leveraging KB Securities' accumulated experience in arranging large landmark PF deals and our operating know-how, we will help developers expand their equity and build a stable financial structure," adding, "Through our partnership with the association, we will contribute to a soft landing of the PF market and the advancement of development finance."
Immediately after signing the memorandum of understanding, the two sides plan to hold working-level consultations and briefings and move into full-scale site sourcing and investment execution.