Korea Investment Real Asset Management Co. has been named the preferred bidder for Seoul Square, one of South Korea’s blockbuster real estate deals this half, after offering 1.3 trillion won ($932 million), according to sources in the investment banking industry on Wednesday.
It beat Capstone Asset Management Co. in a two-way race, which initially attracted the two bidders due to its high price.
Seoul Square, a 23-story office tower with two basement levels, spans about 133,000 square meters of floor space and features one of the world’s largest LED media facades on its exterior.
Built in 1970 as the Daewoo Center, the headquarters building for now-defunct Daewoo Group, and extensively renovated in 2010, it sits directly across from Seoul Station, providing direct links to multiple subway lines in the capital city, the airport rail and high-speed KTX trains.
The tower is jointly owned by Singapore’s ARA Asset Management and Korea’s NH Investment & Securities Co., which bought it in 2019 for 988.2 billion won.
The co-owners have put it up for sale as their real estate fund nears expiry next February.
RELATIVELY HIGH VACANCY RATE
The initial auction attracted Korea Investment and Capstone only due to the building’s expensive price, which was valued at more than 1.4 trillion won by the sellers.
JLL Korea and Savills Korea are advising on the transaction.
The sellers hope to complete the deal with Korea Investment before the end of this year after hammering out differences.
However, despite its prime location and massive office space, Seoul Square faces a relatively high vacancy rate of about 19% after Korea’s e-commerce platform 11Street vacated five floors last September.
The sellers have floated value-add plans, including a partial hotel conversion, while pointing to ongoing redevelopment around Seoul Station and the former Millennium Hilton site as a draw for investors.
Current key tenants include SK Shipping Co., Kyobo Life Insurance Co., Mercedes-Benz and ExxonMobil.
By Gyeong-Jin Min
min@hankyung.com
Sookyung Seo edited this article.
