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Cushman & Wakefield Secures Project Financing For Podo Mall
28 Jan, 2008, Korea
Cushman & Wakefield announced today it has secured the project financing for Podo Mall, the first domestic shopping mall that will be owned and operated by the developer.
Generally, the common practice for financing a retail development involves securing financing for land acquisition and securing funds for other expenses such as construction by pre-selling units in the ‘to be completed’ development. Podo Mall is the first retail development in Korea to introduce a business model whereby project development costs are fully capitalized prior to commencement of construction and where the developer will construct, own and operate the development after completion.
Kang, Seok-Joo, Associate Director, Hanwon Asset says “Podo Mall is a shopping center fully owned and managed by a developer. We believe this model is significant to the success of a shopping mall; COEX & Central City are prime examples. I believe Podo Mall will be a positive step forward in turning around the perception of a stagnant shopping mall image in Korea”
Jason Kim, Senior Manager, Cushman & Wakefield says “Contrary to the general practice, we have been working in conjunction with Hanwon Asset, creating a leasing strategy and obtaining Project Financing for not only the initial expenses but securing the total investment required for the development. Podo Mall is the first domestic shopping mall to operate under the Project Financing model, and we believe it will set a precedent.”
Project Financing for the Podo Mall development was provided by Wachovia Real Estate Korea, Inc. (“WREK”), the Korean real estate lending subsidiary of Wachovia Corporation (“Wachovia”). Wachovia is the fourth largest financial holding company in the United States with total assets of approximately US$754 billion as of 30 September 2007. Kevin Auger, Managing Director within Wachovia’s Asia real estate practice, says “Wachovia’s Korean real estate practice has been a leading advocate for rational construction financing in Korea that departs from the traditional “Bunyang” or pre-sale system of financing. Wachovia capitalized over USD $650 million in real estate projects in Korea during 2007 committing its capital along side leading Korean developers in an effort to further develop the Korean real estate capital markets”.
Podo Mall, developed by Hanwon Asset, is scheduled to open at the end of 2008. Located in Shinrim-dong, an emerging core business district in Seoul, Podo Mall is comprised of 15 floors and has a gross floor area (GFA) of approximately 37,487.31 sq m. Key tenants already committed are Kyobo Bookstore and Lotte Cinema. Cushman & Wakefield has subsequently been appointed as the key leasing agent to secure premium tenants for the retail space.
Kang, Seok-Joo, adds “We expect Podo Mall to become a landmark development in Shinrim-dong, the mall is designed with the philosophy that the shopping mall should be an open space and not closed.”
Cushman & Wakefield is one of the world’s largest commercial real estate services firms. Founded in 1917, the firm has 215 offices in 56 countries, and 12,000 talented professionals. Cushman & Wakefield delivers integrated solutions by actively advising, implementing and managing on behalf of landlords, tenants, lenders and investors through every stage of the real estate process. These solutions include representing clients in the buying, selling, financing, leasing and managing of assets. The firm also provides valuation advice, strategic planning and research, portfolio analysis, and site selection and space location assistance, among many other advisory services. To find out more about Cushman & Wakefield, please visit the firm’s Web site at www.cushmanwakefield.com.
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