Shinsegae, South Korea’s largest retailer, said Monday that it is scheduled to sign a deal with Coex on Friday. The announcement came hours after local news reports suggested Shinsegae’s Coex deal was on the brink of collapse.
The deal will be made between Shinsegae Property, the development unit of Shinsegae Group, and the Korean International Trade Association, the owner of Coex Mall and City Airport Logis & Travel Mall.
The final agreement comes more than three months after the Shinsegae development unit was chosen as a preferred bidder to operate the two malls for the next 10 years through a master lease.
An official at KITA told The Korea Herald that the due diligence review had been delayed as Shinsegae was focused on the recent opening of the mega shopping complex Starfield last month in Hanam, Gyeonggi Province.
By operating Coex Mall and CALT Mall, which combined boast a total of 372 stores, Shinsegae aims to create synergy with Shinsegae Department Store in the neighborhood and Starfield in the south of Seoul.
Sinsegae said it expects to see 66 billion won ($58.3 million) in revenue from both Coex and CALT malls. It also said the details on the minimum revenue guarantee will be available after the two parties sign the contract Friday.
KITA has asked bidders to pay 60 billion won as minimum revenue guarantee every year. The KITA official declined to reveal the actual revenue generated last year, but denied possibility of lowering the commission.
By Park Ga-young (gypark@heraldcorp.com)
