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Financial Supervisory Service Sit Down with CEOs of Real Estate Investment Trusts Discussing Project Financing Risks

NSP NEWS AGENCY, By Hyun-jin Kim and Soo-in Kang, 2024-02-02 08:35 ENX7
#FSS #RealEstateFinancing #RealEstateTrust #LandTrust #WeakPF
NSP통신- (Photo = Financial Supervisory Service)
(Photo = Financial Supervisory Service)

(Seoul=NSP NEWS AGENCY) = The Financial Supervisory Service (FSS) gathered CEOs of real estate investment trusts amid heightened concerns about construction companies’ workouts and poor project financing in the real estate market. In this meeting, the FSS asked for the most conservative risk management and quick sale or reorganization of hardly marketable projects.

On February 1, the FSS met with 14 real estate investment trust CEOs.

In this meeting, the Deputy Chief of FSS said, “In the 10 years, real estate trusts have experienced dynamic growth and become an important driver in the financial industry; the assets of trust companies have grown five times larger, and land trusts have reached 100 trillion won deposits.” The assets significantly increased to 7.9 trillion won by the end of September 2023 from 1.6 trillion won by the end of 2013.


He added, “But we have concerns about whether completion guarantors can survive the worst case scenarios of excessive business expansion in that they hold three times larger, or for some companies, up to eight times larger deposits than their capitals.

“poor asset quality may spread series of risks against lenders, home buyers, and other projects, and further lead to a credit crunch on the entire real estate market,” he warned.

He also asked, “For the borrowed land trust, consider the estimated loss of trust account as 100% and quickly sell or reorganize hardly marketable projects.”

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