SEOUL, KOREA - The bid by Lotte Shopping to sell off its assets as a way to secure sufficient liquidity is expected to be completed by the end of this month at the earliest. According to company sources and foreign media reports on February 4, the Singapore Exchange has approved REITs created to dispose of 18 properties of department stores and discount outlets owned by Lotte Shopping.

 

The real estate properties whose REITs have been approved are valued at about US$100 million, with the returns on investment estimated at 6-7 percent a year. This is by far the largest scale among Korean companies publicly listed on the Singaporean market.

 

Of the department store assets, five locations in Ilsan, Jeonju, Dongrae, Sangin, and Centum City were included in the package. The sales floor of the Ilsan store is 36,300 square meters, with the last year's sales revenue estimated at 290 billion won. The sales floor area of the Lotte Centum City location is 35,000 square meters while that of the Pohang store is 22,110 square meters.

 

Of the discount outlets for sale, the Joonggye location whose sales ranking is as high as seventh or eighth among 106 locations across the country has been included. Its sales floor is 13,860 square meters with its monthly sales revenue estimated at 11 billion won.

 

In June last year, Lotte Shopping announced that it would create a strong liquidity base by taking advantage of the sale-and-lease-back scheme by which the company sells off an asset and lease it right back. Earlier in 2010, the company secured 600 billion won in cash by selling four retail outlets and a department store.