Korea Real Estate Investment & Trust Co. (KOREIT) said on the 24th that it will not participate in the bid to serve as trustee for the integrated reconstruction project of Yangji Village in Bundang (Kumho, Cheonggu and Hanyang apartments, shopping center union). KOREIT had earlier terminated a business agreement it had signed with the residents' representative group.
Korea Real Estate Investment & Trust Co. (KOREIT) disclosed its reasons for not bidding, saying that after reviewing the finalized bid guidelines for the Yangji Village integrated reconstruction project that day, it determined that it would be difficult to ensure fairness and stability, as well as protection of owners' property rights, in areas such as ◇ equity in evaluation criteria, ◇ representativeness of procedures and ◇ plans for handling rights relationships.
Earlier, the residents' representative group terminated its agreement with Korea Real Estate Investment & Trust Co. (KOREIT) on the grounds of a breach of the duty of good faith. The residents' group said it asked for a proposal on trust fees in line with the reconstruction schedule but received no response, which it said disrupted the project's progress. It also raised as an issue that the project was delayed last year due to the omission of a strategic environmental impact assessment.
Korea Real Estate Investment & Trust Co. (KOREIT) also addressed the eligibility screening criteria for the bid, saying, "The bid criteria include a condition that awards full points for the relevant item only to companies with total group assets of 50 trillion won or more, and only some of the 14 domestic trust companies meet this requirement, which could undermine substantive competitive neutrality."
It also pointed out that performance in permits and approvals—such as project implementation plan approval, management and disposal plan approval, sales and completion—which determine the success or failure of a reconstruction project, was effectively excluded from the scoring. The argument is that a structure that selects the developer based only on external indicators such as simple asset size, excluding risk management and the capacity to execute permits and approvals, makes it difficult to protect owners' property rights.
KOREIT also raised issues with the procedure for selecting the developer. KOREIT said, "The bidding process is proceeding while the current residents' representative group is organized around the Hanyang union," and added, "It appears that the effective participation and consent of the representatives of owners in Cheonggu Complex 2 and 32 Sunae-dong (Buildings 601 and 602) have not been sufficiently secured." It continued, "Bid guidelines finalized while key complex representatives are excluded from the decision-making process raise questions about procedural legitimacy."
It also expressed concern about project risks stemming from insufficient cleanup of rights relationships. KOREIT said, "Yangji Village has a complex structure of shared land rights by complex and by union, so from the initial stage the standards for independent settlement and the principles for rights allocation must be clarified," adding, "If these principles are not specifically reflected, there is a possibility of disputes arising at the management and disposal plan stage."