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'Massive Overseas Investment' Cha Biotech Sells Real Estate Assets to Cha Medical Foundation Successively

[비즈한국] It has been confirmed that Cha Biotech085660 recently sold its building site for Gangnam Cha Women's Hospital for 43.2 billion KRW. The buyer is the Sungkwang Medical Foundation, which operates the Cha Medical Group. The Sungkwang Medical Foundation, a related party to Cha Biotech, has purchased 112.4 billion KRW worth of real estate from Cha Biotech over the past year and six months, including this transaction. Cha Biotech's performance and financial status have deteriorated due to recent large-scale overseas investments and rising operating costs. Cha Biotech explained that the background for the sale was to "secure funds for business promotion.".

According to industry sources, Cha Biotech sold the building site of Gangnam Cha Women's Hospital in Gangnam-gu, Seoul, to the Sungkwang Medical Foundation on the 20th of last month. The sale price was 43.2 billion KRW. Both sides signed a direct sale contract late last year and completed the ownership transfer within 20 days. Given that no mortgage was set on the real estate, it appears the transaction was settled entirely in cash. The land sold constitutes the entirety of the 566㎡ (29%) portion previously held by Cha Biotech out of the total 1,949㎡ site of the Gangnam Cha Women's Hospital building.

With this transaction, Cha Biotech has realized a capital gain of 26.9 billion KRW after 12 years. Previously, in January 2014, Cha Biotech purchased the building adjacent to the Sungkwang Medical Foundation's former property for 16.3 billion KRW. Both sides demolished their respective buildings in April 2017. Subsequently, the Sungkwang Medical Foundation built the current Gangnam Cha Women's Hospital, which stands 7 stories below ground and 15 stories above ground, on the two plots of land in 2020. It is reported that Cha Biotech, having owned a portion of the site, had been receiving land usage fees.

A Cha Biotech official explained, "We sold the site at a fair market value determined by an appraisal for the purpose of securing funds for business promotion.

Cases of Cha Biotech selling real estate to the Sungkwang Medical Foundation have been occurring successively. Previously, in July 2024, the foundation purchased a portion (8%) of the stake in the Cha Medical Group Pangyo Comprehensive Research Institute building in Seongnam, Gyeonggi Province, held by Cha Biotech for 30 billion KRW. In October of last year, it bought the entire remaining stake (10%) in the same building held by Matica BioLabs, a wholly-owned subsidiary of Cha Biotech, for 39.2 billion KRW. Including the Gangnam Cha Women's Hospital site, the total value of real estate sold by Cha Biotech to the Sungkwang Medical Foundation over the past year and six months reaches 112.4 billion KRW.

The Sungkwang Medical Foundation is the medical corporation of the Cha Medical & Bio Group. It was established in February 1990 by Cha Kwang-ryul, Chief of the Cha Medical & Bio Group Global Research Institute, and his father, the late founder Cha Kyung-sup, who contributed cash and real estate. It currently operates Gangnam Cha Hospital, Ilsan Cha Hospital, the Cha Fertility Center, and Chaum. In 2024, the foundation's revenue reached approximately 996.6 billion KRW, including 930.6 billion KRW in medical business revenue, and its total assets amounted to 831.2 billion KRW. Currently, Kim Hye-sook, wife of Chief Cha Kwang-ryul, and their son Cha Won-tae, Vice Chairman of the Cha Medical & Bio Group, are serving as directors of the foundation.

Cha Biotech is the bio-firm of the Cha Medical & Bio Group. Since its establishment in November 2002, it has been engaged in cord blood banking, stem cell research, the development of cell therapies, and medical services related to anti-aging. As of the 2nd, the company's major shareholders include KH Green, controlled by Chief Cha Kwang-ryul's family (9.5%), Chief Cha (4.39%), eldest son Vice Chairman Cha Won-tae (3.34%), eldest daughter Cha Won-young (1.39%), second daughter Cha Won-hee (1.14%), and wife Kim Hye-sook (0.77%). The Sungkwang Medical Foundation is also a related party to Cha Biotech, holding a 0.73% stake.

Recently, Cha Biotech's operating performance has been on a downward trend. While consolidated revenue increased from 844.6 billion KRW in 2022 to 1.0451 trillion KRW in 2024, operating profit turned to a deficit of 47.1 billion KRW in 2022, recording a loss for three consecutive years, reaching -59.7 billion KRW in 2024. The cumulative revenue for the third quarter of last year was 921.7 billion KRW, with an operating loss of 41.3 billion KRW. The company's debt increased nearly two-fold from 742 billion KRW (94% debt ratio) at the end of 2021 to 1.5689 trillion KRW (206%) at the end of September last year. The recent sluggish performance is attributed to increased investments and operating costs for the entry of its U.S. subsidiary, Matica Biotechnology, into the CDMO (Contract Development and Manufacturing Organization) business for cell and gene therapies.

Currently, the third-generation owner, Vice Chairman Cha Won-tae, is at the forefront of Cha Biotech's management. Cha Biotech held an extraordinary general meeting of shareholders on the 13th of last month and newly appointed Vice Chairman Cha Won-tae as an internal director. This comes four months after he was appointed Chief Sustainability Officer (CSO) of Cha Biotech in September last year. Previously, Vice Chairman Cha served concurrently as CSO of Cha Biotech and as a director at the Sungkwang Medical Foundation and the Sewon Medical Foundation. As Vice Chairman Cha takes up a key position at Cha Biotech, which acts as the group's holding company, it appears the management succession process will gain momentum.