A redevelopment apartment in Daechi-dong, Gangnam, Seoul, has been confirmed to have failed to pay construction costs to the construction company due to inability to repay project financing (PF) loans. There is no money to repay the PF loan due at the end of October. The construction company has provided a joint guarantee of 170 billion won, and the occupancy has begun without receiving the construction costs.
The redevelopment association plans to refinance a total of 230 billion won, combining the 170 billion won PF loan and additional contributions from association members, and afterward sell the space intended for commercial distribution to repay this. Since they have to provide the entire apartment as collateral, personal loans are expected to be entirely blocked. The maintenance industry predicts that if refinancing does not go well, the amount each household in the association will have to repay will reach 1.1 billion won.
According to the maintenance industry on the 12th, the A redevelopment association in Daechi-dong, Gangnam, is promoting an urgent notice for refinancing on a scale of 230 billion won to repay the PF loan due on October 27.
This site develops a total of 282 units in 8 buildings with 4 basement floors and 16 above-ground floors on a 14,833.7 square meter site in Daechi-dong. The construction company is Hyundai E&C. Occupancy began on the 11th.
An association official noted, "We intended to sell the commercial land before the PF loan maturity, but delays have increased financial costs, and we are pushing for refinancing as there is no money to repay the PF loan."
The association received a PF loan of 170 billion won from the National Agricultural Cooperative Federation (NongHyup) for operational business expenses and construction costs. Hyundai E&C provided a joint guarantee on this loan. If the association fails to repay the loan, Hyundai E&C is obliged to repay it, and Hyundai E&C has informed the members that "if we do not secure repayment funds, we cannot allow occupancy." Hyundai E&C has also not received the remaining construction costs of 74 billion won.
Due to this, the occupancy, which was scheduled to start on August 1, has been postponed to the 11th. An industry insider said, "The association and Hyundai E&C discussed the refinancing process and agreed to ensure occupancy."
The association plans to refinance 230 billion won by September and repay this by selling the commercial land in the future. The amount raised through refinancing is planned to be used to repay the 170 billion won PF loan. Also, since the association is providing the entire apartment as collateral for refinancing, all individual loans for property owners (members) are blocked. Some funds will also be used to lend necessary money for members who need contributions for occupancy.
However, if the plans fail and the sports facility land is not sold, the association will have to repay the loan itself. The amount each member will have to contribute is estimated to be around 1.1 billion won.