[Edaily Park Jung-Soo Reporters Kim Hyung-il and Shin Ha-yeon] The “Bentley Residence Seoul” development project—Asia’s first ultra-luxury residential complex under the “Bentley” brand, currently being planned in Cheongdam-dong, Gangnam-gu, Seoul—is facing difficulties in securing project financing (PF). This comes as HANWHA INVESTMENT & SECURITIES(003530), which was pursuing the role of lead financial arranger, failed to clear its internal investment review process, and #GS Engineering & Construction Corp—which had initially been a strong contender as the general contractor—has also decided not to participate in the project. While #Meritz Securities is currently in discussions to take over as the lead financial arranger, observers predict that it will take a considerable amount of time to finalize the main project financing (PF), compounded by the burden of sales prices reaching 24 billion won per unit.

◇ Meritz Securities Steps In Where Hanwha Securities Left Off… GS Engineering & Construction Corp Withdraws
According to the investment banking (IB) industry on the 3rd, Meritz Securities is reportedly considering participating as the lead arranger for the follow-on project financing (PF) of the “Bentley Residence Seoul” development project. A Meritz Securities official stated, “As this matter is currently under discussion, it is difficult to provide specific details.”
Bentley Residence Seoul is a high-end residential complex being built on the site of the former Eunsung Building in Cheongdam-dong, Gangnam-gu, with 7 basement levels and 26 above-ground floors. It is planned to consist of a total of 33 units, including 26 apartment units and 7 officetel units. The sale price for the residential units (330 million won per 3.3 square meters) ranges from approximately 23.8 billion to 27.3 billion won per unit, while the penthouse on the top floor is priced at 50 billion won.
This project is a “branded residence”—a type of residential development that leverages the British premium automobile brand Bentley—and marks the second such project globally (following Miami, USA) and the first in Asia. While it is generally understood in the industry that the license and royalty fees paid by developers in exchange for brand usage typically range from 2% to 5% of sales revenue, the specific contractual terms for this project have not been disclosed.
Initially, HANWHA INVESTMENT & SECURITIES was set to serve as the lead underwriter for this project, but it is understood that the firm withdrew from the project around last June after failing to pass its internal investment review. HANWHA INVESTMENT & SECURITIES had initially considered a financing structure involving a total of 480 billion won, divided into 300 billion won in senior debt, 100 billion won in mezzanine debt, and 80 billion won in subordinated debt. Based on total projected sales of 856 billion won, the loan-to-value (LTV) ratio, including subordinated debt, was calculated at 56.1%.
There were also delays in selecting a construction contractor. The financial structure outlined in the proposal was designed on the premise that GS Engineering & Construction Corp would be responsible for ensuring project completion and would assume the debt in the event of non-performance. Under this structure, if GS Engineering & Construction Corp fails to ensure completion within 50 months from the initial loan drawdown date, it would assume the project finance debt within a specified range. However, after reviewing its participation in the project, GS Engineering & Construction Corp ultimately decided not to participate.
A GS Engineering & Construction Corp official stated, “We reviewed participation in this project, but following an internal review, we ultimately decided not to participate,” adding, “We have communicated this decision to the project developer after consultation.”
Although there were market speculations that Meritz Securities—which had been mentioned as a potential lead underwriter—would fully finance the 450 billion won project finance loan and that GS Engineering & Construction Corp had been confirmed as the contractor, this differs from the current confirmed situation. GS Engineering & Construction Corp has decided not to participate in the project, and Meritz Securities is continuing discussions regarding the project finance structure.
According to industry sources, the structure for securing approximately 460 billion won in PF loans through Meritz Securities has largely been finalized. However, since the general contractor has not yet been confirmed, discussions are currently underway with a new contractor regarding conditions such as guaranteed completion and credit enhancement.
An investment banking industry official stated, “In the recent real estate project financing market, it is not uncommon for financial lead managers to go beyond simply organizing a lending syndicate and directly underwrite a portion of the funding, such as mezzanine and subordinated loans.” The official added, “Since the creditworthiness of the construction company responsible for guaranteeing project completion and the credit enhancement conditions will determine whether lenders join the syndicate, it appears more time will be needed before the main project financing is finalized.”
◇ Ultra-High Price of Over 24 Billion Won Per Unit… Questions Surround Pre-Sales
The ultra-high pre-sale prices are another factor behind the financial sector’s conservative stance on the “Bentley Residence Seoul” project. According to the proposal, the pre-sale price per 3.3 square meters of exclusive floor area for the apartment units is 330 million won. A 72-pyeong unit ranges from approximately 23.8 billion to 24.3 billion won per household, while an 82-pyeong unit ranges from 27.2 billion to 27.3 billion won. Officetels are priced at 350 million won per 3.3 square meters of exclusive floor area, and the penthouse on the top floor reaches 50 billion won. Total projected sales revenue from pre-sales is approximately 856 billion won.
The LTV, including subordinated debt, is 56.1%, and the price per 3.3 square meters of exclusive area based on the break-even point (BEP) is only 190 million won, leading to an assessment that the project has sufficient stability. For senior debt, the LTV was analyzed at 35.1%, and the exit sales rate at 41.2%.
However, some in the financial sector argue that it is difficult to judge the project’s stability based solely on the low LTV. This is because the projected revenue of 856 billion won—which serves as the basis for calculating the LTV—is itself premised on a sales price that far exceeds 300 million won per 3.3 square meters. If actual sales do not proceed as planned, this could also impact the loan recovery structure.
An official in the investment banking industry stated, “While the LTV itself is on the low side, it remains to be seen whether actual presales can proceed smoothly given prices exceeding 20 billion won per unit,” adding, “I understand that lenders are taking a conservative approach to participation due to concerns about presale performance.”