[Edaily Marketin KIM SUNG-SOO Reporter] Lotte General Insurance has decided to maintain its investment in the “Lotte Premium Outlet Icheon” for another two years.

Although the company had initially planned to exit the investment—by selling its income securities—ahead of their maturity this month, it shifted course to extend the maturity after facing difficulties in exiting due to high interest rates. This move is interpreted as a strategy to buy time until market conditions improve, rather than disposing of the asset immediately.

Asset Sale 'Stalled' Due to High Interest Rates… Shift to 'Maturity Extension'

According to the financial investment industry on the 10th, Lotte Property & Casualty Insurance extended the maturity of its investment in the “Lotte Premium Outlet Icheon” income securities following a review last month. The original maturity date was the 2nd of this month, but the new maturity date has been extended by two years to August 2, 2028.

The Lotte Premium Outlet Icheon is located at 177-74 Premium Outlet-ro, Hofa-myeon, Icheon-si, Gyeonggi-do. It is the third Lotte Premium Outlet in Icheon, Gyeonggi-do, and the first Lotte Premium Outlet in the southern Gyeonggi region. It is situated within the Icheon Fashion Logistics Complex.

This asset is included in the “Richmond Outlet General Private Real Estate Investment Trust No. 1.” This fund is managed with the Lotte Premium Outlet Icheon Branch as its underlying asset and has a total size of 82 billion won.

Initially, investors had expected to recover their investments through the sale of the asset upon the fund’s maturity. However, with the recent prolonged period of high interest rates, the financing burden on real estate buyers has increased, and it is reported that the sale process has not proceeded smoothly.

Consequently, Lotte General Insurance decided to extend the maturity rather than proceed with the sale, thereby delaying the exit. This move effectively secures time to pursue a sale again should interest rates and real estate market conditions improve.

82-billion-won Fund… Investors in Loan Receivables and Income Securities

The fund’s (total 82 billion won) capital structure consists of 57 billion won in loan receivables and 25 billion won in income securities. Both senior and subordinated investors participated in the loan receivables.

The senior loans (interest rate: 5.2%) were funded by △Jeonbuk Bank (20 billion won), △Lotte Capital (12 billion won), △Gwangju Bank (10 billion won), and △Gyeongnam Bank (5 billion won). Hana Capital participated with 10 billion won in the subordinated loans (interest rate: 7.5%).

Participants in the revenue securities included Lotte General Insurance (10 billion won), as well as △JT Chinhae Savings Bank (5 billion won), △IBK Investment & Securities (Trust) (6.9 billion won), and △IBK Capital (3.1 billion won).

With this two-year extension, Lotte Property & Casualty Insurance has secured the option to recover its investment at a more favorable time while monitoring market conditions. In addition to Lotte Property & Casualty Insurance, other institutions also participated in the maturity extension.

Industry observers view this maturity extension as more than just a simple extension of the investment period; they see it as an example of the current exit environment in the commercial real estate market. Analysts note that even for assets in prime locations, it is difficult to determine the right timing for a sale due to high funding costs and differing expectations regarding investment returns.

An official from the financial investment industry stated, “If interest rates and conditions in the real estate investment market improve in the future, the sale of the Lotte Premium Outlet Icheon branch may be pursued again,” adding, “Since now is not a favorable time to sell, the decision was made to wait for a more appropriate opportunity.”