Alpha Investment in talks to sell Seoul building for over $850 mn

  • 2018-08-16
Seoul Square building

Seoul Square building

Singapore-based Alpha Investment Partners is in negotiations with Hana Financial Investment Co. Ltd. to sell a landmark office building across Seoul railway station, for which the South Korean company suggested close to 1 trillion won ($885 million).

Alpha Investment, a real estate fund manager, put Seoul Square building up for sale after it secured WeWork, a US shared office provider, as a new tenant for a 20-year lease earlier this year, according to investment banking sources last week.

The new lease helped lower the vacancy rate of the 23-story property to about 10% from 30~40% two years ago, amid concerns about an increase of new office supply in central business districts.

Alpha Investment began talks with Hana after its exclusive negotiating period with South Korea’s KB Securities Co. Ltd. ended without a result.

Hana Financial, a securities firm, offered around 24 million won per 3.3 square meters for the 132,806-square-meters building, which would bring at least 966 billion won ($854 million) in total.

It is expected to form a consortium with affiliate Hana Bank and other investors to fund the prospective deal which would be its single largest acquisition in history.

WeWork occupies four floors of Seoul Square, or about 20,000 square meters. Other tenants include Mercedes-Benz Korea and SK Planet Co. Ltd., an internet company of mobile carrier SK Telecom Co. Ltd.

EASY COMMUTE TO OTHER PROVINCES

Alpha Investment acquired Seoul Square, completed in 1977, from Morgan Stanley for about 800 billion won in 2011.

Morgan Stanley had paid 960 billion won for the purchase of the former headquarters of the collapsed Daewoo Group in 2007 in then the largest real estate transaction in South Korea.

The US investment bank reportedly spent an additional 100 billion won on extensive renovation in 2009.

Seoul Square and nearby office buildings are improving occupancy rates thanks to their locations close to the Seoul railway station.

Government ministries and public institutions opened their Seoul offices near the railway station for an easy commute from their new headquarters. They moved to other provinces to follow policy goals of balanced regional development over the past few years.

The planned sale of Seoul Square comes after Alpha Investment sold Pacific Tower, a 23-story office building, in Seoul reportedly for 430 billion won to a South Korean asset manager early this year.

In 2016, it bought the 33-story Jongno Tower in downtown Seoul for 300 billion won.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>