Core Pacific City Mall (京華城) has inked a pact with an international property broker to help auction off its shopping center in downtown Taipei, allowing the unprofitable retailer to exit the market.
The 18-year-old department store is owned by Core Pacific Group (威京集團), which has business interests in the civil engineering, construction, petrochemical, financial and entertainment sectors.
The group incurs losses of between NT$300 million and NT$500 million (US$10.28 million and US$17.13 million) a year due to heavy interest and amortization costs, people with knowledge of the matter said.
The mall took out a syndicated loan of NT$12 billion two decades ago to finance construction of the L-shaped complex of two buildings in Taipei’s Songshan District (松山), the sources said, adding that it has 12 stories above ground and eight below, with a total floor space of 62,000 ping (204,959m2).
Shareholders on Feb. 26 approved proposals to prevent more losses by selling the property by the end of this year or early next year, the sources said, adding that the shopping center was still thinking of renovating the complex to reverse its financial standing, depending on which option is more practical.
“Utter divestment appears to be the winning strategy now that the mall has tapped Cushman & Wakefield to organize an auction,” a source said.
The complex, which sits on a plot measuring 5,000 ping, could generate between NT$40 billion and NT$50 billion in revenue, making it the largest commercial property deal this year.
The Taipei City Government agreed to restore the complex’s floor-to-area ratio to 560 percent from 390 percent, a decision that should better motivate potential buyers, the sources said.
The complex is limited to the development of international tourist hotels and department stores, meaning buyers who plan to develop it into residential property would have to get it rezoned.
“Rezoning is not impossible,” one source said.
The mall, which features boutique stores, restaurants and movie theaters, would break even if interest and amortization are ignored, the sources said, adding that Cushman & Wakefield might shed more light on auction requirements next month.
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