Lotte Shopping Co. has put one of its core department stores Lotte Department Store Centum City in Busan on the market in line with its parent group’s restructuring efforts to improve financial conditions, according to people with knowledge of the matter on Friday.
The department store is located in Centum City, an affluent commercial and residential neighborhood in Busan, South Korea’s second-largest city. The property, with 10 above-ground floors and seven floors below, is expected to fetch 200 billion-300 billion won ($142 million-$213 million).
Cushman & Wakefield, a US real estate services firm, was picked as its sale manager.
“It is in the very early stage of selling the Centum City store and selectively reaching out to potential buyers,” a real estate financing service company official told Market Insight, the capital market news outlet of The Korea Economic Daily.
A Lotte Shopping official confirmed that it is considering selling the property as one of several options it is looking into, but nothing has been determined.
The property is expected to be redeveloped into a new commercial or multicomplex building, said the sources.
Lotte Department Store Centum City opened in 2007 in Centum City near Haeundae Beach, an iconic beach in Busan. It is the newest branch of the department store operator in the city.
Its archrival Shinsegae Inc.’s arrival in the neighborhood in 2009, however, dealt a heavy blow to Lotte. Shinsegae Centum City, just 10 meters from Lotte outlet, is the world’s largest shopping complex.
Sales at Lotte Department Store Centum City nosedived to 133.4 billion won in 2023 from 300 billion won in its peak years. Now it ranks 29th out of Lotte’s 32 department stores in terms of sales.
In the nine months ended in September, the branch posted 63.5 billion won in sales.
Despite its sagging revenue, Lotte had hesitated to dispose of the Centum City branch, its fourth department store in Busan. The port city has a symbolic meaning for the retail giant. Its late founder and Chairman Shin Kyuk-ho started his Korean business as a chewing gum maker in the southeast city of Korea in his 20s.
Lotte Department Store has been slow in unloading non-performing assets relative to its sister companies. Last year, it offered to sell some stores and properties, but none of them has yet to find a buyer.
In 2014, Lotte sold four department store branches, including one in Ilsan, Gyeonggi Province and another in Dongnae-gu district, to South Korean asset managers such as KB Asset Management, Capstone Asset Management and Lotte REIT Co.
The investment firms are now seeking to sell the properties.
On Thursday, Lotte Group denied liquidity crisis rumors sparked by Lotte Chemical Corp.’s struggle to meet bond redemptions.
By Byung-Hwa Ryu
hwahwa@hankyung.com
Yeonhee Kim edited this article.
