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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Lotte Group is moving to unlock the value of its idle land assets—estimated at up to KRW 50 trillion—through large-scale real estate development, as it seeks to address weakening affiliate performance and mounting liquidity pressures.
According to disclosures on March 31, Lotte Corporation affiliate Lotte Property & Development acquired land and buildings owned by Lotte Chilsung Beverage in Yangpyeong-dong, Yeongdeungpo-gu, Seoul, for KRW 280 billion. The stated purpose of the acquisition is to pursue real estate development.
The site, currently used as a logistics and vehicle maintenance facility, spans approximately 21,120 square meters and is expected to be redeveloped into residential complexes such as apartments. Located near Seonyudo Station on Seoul Subway Line 9 and close to the Han River, the land is considered highly attractive for housing development, with the potential to accommodate around 500 units.
This marks the beginning of a broader strategy under which Lotte plans to directly develop idle land into apartments, mixed-use complexes, and commercial facilities to improve group-wide cash flow. The move comes as key affiliates such as Lotte Chemical and Lotte Engineering & Construction face increasing financial strain.
Additional large-scale projects are also in the pipeline. In the second half of the year, Lotte is expected to advance a KRW 4 trillion mixed-use development on a 42,312-square-meter site in Seocho-dong, currently owned by Lotte Chilsung. The site—valued at over KRW 2 trillion—is slated for redevelopment into officetels, office space, and retail facilities.
Other properties earmarked for development include Lotte Shopping’s Sangam Lotte Mall site and land owned by Lotte Wellfood in Yeongdeungpo. Internally, the group is reportedly considering launching up to four or five such development projects within the next one to two years.
Meanwhile, Lotte Engineering & Construction is also leaning toward developing its headquarters site in Jamwon-dong rather than selling it, following internal assessments that self-development would yield higher value.
The real estate push is expected to help alleviate liquidity pressures across the group. Lotte Holdings’ debt ratio has risen from 100.3% in 2019 to 144.87% last year, while short-term borrowings nearly doubled to over KRW 1.56 trillion. Debt levels at key affiliates remain high, with Lotte Engineering & Construction at around KRW 6 trillion and Lotte Chemical at approximately KRW 13 trillion.
If the projects proceed as planned, Lotte Engineering & Construction is expected to participate as the primary contractor, improving its earnings structure. Increased cash generation across the group could also ease funding constraints for affiliates such as Lotte Chemical.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
