Samsung-Tesco Expanding Outlets Using 'Build to Suit' Method with STS Development and GE Asset Estate

◇ "Expanding outlets, even without cash on hand" "We have enough cash flow." At a press conference held on the 5th to mark the opening of the Homeplus Jamsil store, Samsung-Tesco Chief Financial Officer Mike Iddon was asked by reporters whether the company planned to go public to raise funds for new store openings. "Not at the moment," he replied. Samsung-Tesco's Homeplus currently posts an operating margin about half that of Shinsegae's E-Mart, and its cash holdings fall well short of those of Lotte Shopping (023530). Even so, how is Homeplus able to set out a vision of "securing 132 discount stores (up from the current 62) by 2011 to become the industry's No. 1"? A look at Homeplus's recent approach to store openings offers some insight. Samsung-Tesco has recently been expanding its store openings using the "Build to Suit" method in partnership with STS Development and GE Real Estate. Under this arrangement, Homeplus leases stores that STS Development or GE has invested in and built. Nine such stores (including planned sites) are currently in locations such as Busan, Jeonju, and Jinju. For Homeplus, this means opening new stores without having to bear the cost of purchasing land or constructing buildings. Lotte Shopping, which secured substantial cash through its IPO last year, has also recently established Lotte Asset Development Co., Ltd. jointly with Lotte Engineering & Construction, and is reviewing efficient store-opening strategies from multiple angles. Vice Chairman Shin Dong-bin said the main purpose of establishing Lotte Asset Development was the efficient asset management and operation of the retail business, including the securitization of Lotte Mart's real estate. Meanwhile, E-Land, which has drawn attention for its aggressive asset securitization, is also reportedly preparing to carry out additional sale-and-leaseback transactions for its Homever stores.