Mr Viral
The Asset Gangnam changed hands at a higher price than expected (Image: Koramco)
A private REIT of South Korean fund manager Koramco has sold an office tower in Seoul’s Gangnam business district to Samsung SRA Asset Management for KRW 1.1 trillion ($820 million).
The disposal of The Asset Gangnam by Kocref 43 REIT marks South Korea’s largest commercial real estate deal to be completed this year, according to the Korea Herald. The REIT had acquired the 81,117 square metre (873,136 square foot) building from Samsung C&T, a construction and engineering firm under Samsung Group, in 2018 for KRW 748 billion.
“While there were concerns about overpaying at the time of the acquisition, it was an opportunity to acquire a trophy asset in the Gangnam area,” Koramco REITs & Trust vice president Yoon Jang-ho told the Herald. “Going forward, Koramco’s mission is to continue sourcing excellent deals and delivering superior returns to both domestic and international investors.”
Samsung SRA, the real estate investment arm of Samsung Group, was selected in July as the preferred bidder for the landmark tower over other interested parties including US buyout giant KKR and Korean firms IGIS Asset Management and Mirae Asset Global Investments, banking sources told the Korea Economic Daily.
Price Beats Views
The sale price of the building formerly known as Samsung C&T Seocho Tower translates to KRW 13.6 million ($10,000) per square metre, exceeding the market’s initial estimate of KRW 12.1 million at the outset of the sale, according to Alpha Biz.
Samsung SRA Asset Management CEO Chung Keun Kim
With the divestment of The Asset Gangnam, Koramco is set to reap KRW 276 billion in profit and distribute KRW 398 billion to investors, the Korean news site said.
The latest trade in the prime office district follows CapitaLand Investment’s KRW 440.8 billion ($330 million) purchase of the Golden Tower office building in Gangnam from South Korea’s NPS last month on behalf of a new private vehicle launched by the Temasek-controlled fund manager.
The red-hot Seoul office market helped boost the city’s volume of income-generating property investment to $7.4 billion in the first half of 2024, trailing only Tokyo’s $10.1 billion, according to MSCI’s latest Asia Pacific Capital Trends report. The Korean capital reclaimed the No.2 spot it lost to Shanghai last year.
“Seven office deals each valued at more than $100 million took place in the second quarter, including the only single-asset office deal globally this year that exceeded the $1 billion volume mark,” the data provider said.
MSCI was referencing Daishin Asset Management’s $1.02 billion forward purchase of a redevelopment project from a joint venture of IGIS Asset Management and Kyobo Life Insurance. Other large office deals in the first half included Koramco’s $593.1 million acquisition of Arc Place in Gangnam from private equity giant Blackstone.
Daishin Deal Flop
Despite the frothy market, recent months have seen the collapse of at least one high-profile Korean office deal amid surging prices and elevated interest rates.
KED reported in September that Daishin Securities had called off a plan to sell its headquarters building in the Jung financial district of Seoul to NH-Amundi Asset Management for KRW 660 billion ($497 million) after the latter failed to recruit investors for its acquisition fund.
The exercise was the securities firm’s second attempt to sell its main office building in the capital, after a previous deal with IGIS Asset Management collapsed in August 2023 due to differences over the sale price, the newspaper said.
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