Land & Housing Corp. sale bid canceled again on 16th try

LH’s Ori office building in Bundang, Gyeonggi Province. [Courtesy of LH]

The Korea Land & Housing Corp. (LH)’s attempts to sell its Ori office building in Bundang, Gyeonggi Province, to reduce the company’s massive debt pile continues to be unsuccessful as it enters its 14th year. The building’s limited use despite the high price has led to no successful bidders or buyers at the auction to date.

According to the state-run LH on Thursday, the bidding for the sale of the Ori building closed on August 23 with one bid which was eventually canceled as the bidder did not pay the deposit and the 16th attempt to sell the building was unsuccessful.

Completed in 1997, the Ori office building was used as LH’s headquarters until the merger of the Korea National Housing Corp. and Korea Land Corp. in 2009. Following the merger, the building has been used as the office for the southern Gyeonggi region after the headquarters moved to Jinju, South Gyeongsang Province.

LH has been pushing for the sale of the Ori building since 2010, as the company believes selling its assets is key to reducing its debt-to-equity ratio below 200 percent.

LH has been designated as an institution at financial risk and is required to trim its debt ratio to below 200 percent by 2026. LH President Lee Han-joon had unveiled his goal in this year‘s business plan to achieve a debt ratio of 207 percent by selling idle assets. LH’s debt-to-equity ratio stood at 218.7 percent at the end of last year.

The Ori building has a land area of 37,99 square meters and a gross floor area of 72,011 square meters, consisting of a main building with two basement floors and eight floors above ground and an annex with two basement floors and four floors above ground.

Despite its excellent location near Ori Station on the Bundang Line, LH has found it difficult to find a buyer as the building’s use is limited to business and cultural facilities and the appraised value is high at 580.1 billion won ($436.8 million).

“There are only a limited number of buyers for a property of this size,” an official from LH said. “I think there are no active buyers as they can‘t build residential facilities there.”

LH was once in talks with the Seongnam City local government to change the site’s use, but those did not produced any results either.

As the Ori building continues to be put up for sale, LH is also considering using the building for public purposes instead of selling it. The Korea Tourism Organization is also using its former headquarters in Jung District, Seoul as the country’s tourism promotion center.

All possibilities are under consideration as the sale of the Ori building requires another appraisal, costing hundreds of millions of won, as per the guidelines of the Ministry of Economy and Finance.

“Nothing has been decided yet, but there are cases where other public institutions have opted for public use,” a second LH official said. “We are considering various options, including putting it up for sale again or discussing its public use with the Ministry of Land, Infrastructure, and Transport.”