LH, HUG Offer Private-Sector Project Operators 4.7% Annual Low-Interest Loans; Kumho Consortium First to Receive Support
4.7% low-interest loans for Kumho consortium
KRW 152.8 billion guarantee limit put in place
Korea Land and Housing Corporation (LH) and the Housing and Urban Guarantee Corporation (HUG) announced on November 2 that they had signed a financial guarantee agreement with a consortium led by Kumho E&C, the project operator for the Pyeongtaek Godeok A-63 District, to secure low-interest loans at an annual rate of 4.7%. This is the first case in which the low-interest financing support program for public housing projects involving private-sector participation has been applied.
The Pyeongtaek Godeok A-63 District is a public housing project that will offer 630 homes for sale. The project is being carried out by a consortium led by Kumho E&C and comprising Woomi Construction, Shin Dong-A Construction, and Shinheung D&C.
The Kumho E&C consortium received approval from HUG for a total guarantee limit of KRW 152.8 billion. After signing the financial guarantee agreement on October 27, the consortium drew down the first loan installment of KRW 21.9 billion on October 28. The loan carries an annual interest rate of around 4.7%. This is lower than the financing and project financing (PF) rates generally available to private construction companies, and is expected to help accelerate the public housing project by reducing its interest burden.
LH and HUG are implementing a financial support program for private-sector project operators to ease their financing burdens. Starting in July this year, HUG began offering a financial support product for for-sale housing in LH-contracted projects involving private-sector participation. The product guarantees up to 90% of total project costs and carries a flat annual guarantee fee of 0.324%.
Following the Pyeongtaek Godeok A-63 District, the two organizations plan to pursue financial guarantee agreements for subsequent projects, including A-1BL and S-2BL, with a combined total of 540 homes.
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Park Hyungeun, head of LH's Public Housing Division, said, "The signing of this first financial guarantee agreement is a meaningful achievement in which the public sector worked together to open a path to housing supply amid high interest rates. We will continue to work closely together to rapidly provide the high-quality housing people want." Choi Jongwon, head of HUG's Fund Projects Division, said, "We will continue to ease financing difficulties on the ground and provide financial support for the supply of public housing."
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