Hong Kong-based real estate developer Lippo Ltd. said earlier this week that its joint project with US gaming giant Caesars Entertainment Corp. for the construction of an integrated resort in Incheon, South Korea may not be materialized due to “a number of uncertainties.”
Late in 2014, the consortium of Lippo and Caesars Entertainment subsidiaries reached a conditional deal for the purchase of a 90,000-square-meter portion of land for the planned hotel and casino resort from vendor MIDAN City Development Co. Ltd. Lippo holds a 55% stake in the latter company.
Earlier this week, however, it became clear that the involved parties have not agreed on all the necessary conditions regarding the sale of the said portion of land. Here it is important to note that the purchase agreement is set to expire on December 31, 2015. Lippo said in a filing to the Hong Kong Stock Exchange that they may not be able to proceed with the casino project due to “a number of uncertainties.”
The real estate developer explained that the said “uncertainties” are related to whether the conditional land deal would eventually be finalized and whether the consortium member would agree on various investment terms.
LOCZ Korea Corp., as the consortium has been named, comprises Lippo Worldwide, a wholly owned subsidiary of Lippo, OUE International, a company partly owned by the Hong Kong-based real estate developer, and Caesars Entertainment’s Caesars Korea.
Lippo said in its filing that LOCZ Korea has entered into negotiations with MIDAN for the potential extension of the deadline as well as for finding mutually acceptable solutions for the eventual closure of the land deal.
Lippo and Caesars Entertainment’s joint casino project was approved by South Korea’s Ministry of Culture, Sports, and Tourism in March 2014. The two companies and their subsidiaries are planning to build an integrated resort with a foreigner-only casino, several hotels, residential buildings, retail and entertainment facilities, convention centers, etc.
The project will be rolled out in phases, with Phase One likely to be completed in 2018. The amount of KRW743.7 billion is to be spent on this first phase. The whole project is expected to cost more than KRW2.3 trillion. As mentioned above the casino resort will be located in the city of Incheon, which has long been known as the country’s most important transportation hub due to its international airport.
