Singapore’s GIC Private Ltd., the world’s sixth-largest sovereign wealth fund, dropped the sale of a landmark building in Seoul due to the prolonged political woes in South Korea with President Yoon Suk Yeol impeached over his surprise martial law decree.
CBRE Group Inc., the manager of GIC’s sale of Seoul Financial Center (SFC), notified of the withdrawal on Wednesday bidders including BentallGreenOak (BGO), South Korean asset managers Koramco REITs Management and Trust Co. and its subsidiary Koramco Asset Management Co., according to investment banking industry sources.
SFC’s value had been initially estimated at up to 1.5 trillion won ($1 billion), but the highest bid for the 30-story office building in Seoul’s central business district was known to be around only 1.2 trillion won at the first tender on Dec. 2, the sources said.
New bids at the second tender last week failed to satisfy GIC, according to the sources.
GIC, with about $770 billion in assets under management, has been considering selling SFC, which it bought for 350 billion won in 2000 after the 1997-98 Asian financial crisis.
The sovereign wealth fund has been a magnate in the South Korean real estate market for more than 20 years, owning other landmark offices such as the Gangnam Finance Center.
SOURED SENTIMENT
Asset managers in South Korea have been reluctant to make new investments in office buildings as the country’s political crisis is expected to make fundraising difficult, investment banking industry sources said.
Those managers cut valuations as cash reserves of blind funds for equity investments dried up and interest rates for property loans are likely to rise, according to the sources.
GIC is not the only investor that dropped sales of real estate assets.
Pebblestone Asset Management Co., founded in 2016 by Terry Hwang, former CEO of Deutsche Asset Management Korea Ltd., withdrew the sale of an office building in Seoul’s central business district.
Pebblestone failed to receive satisfying bids for the 23-story building at a tender on Dec. 4, a day after the declaration of martial law. The asset manager with some 4 trillion won in assets decided to extend the maturity of a fund for the building.
Pebblestone had sought to sell the building, which it bought for 430 billion won with money from the National Housing and Urban Fund, ahead of the maturity.
By Byeong-Hwa Ryu
hwahwa@hankyung.com
Jongwoo Cheon edited this article.
