KKR Sells Coupang Warehouse Near Seoul to Korea’s IGIS for Over $366M

KKR has sold a recently completed Seoul-area warehouse leased to Korea’s largest e-commerce player for a reported KRW 500 billion ($366.4 million), as online shopping continues to gain traction in the northern Asian country.

The US private equity giant sold the Incheon Seoknam Coupang Logistics Center, a 299,244 square metre (3.2 million square foot) facility in Incheon, to Korean asset manager IGIS Asset Management, following through on a forward purchase agreement signed by the two companies over a year ago, according to market sources familiar with the transaction. A report by Seoul Property Insight priced the transaction at KRW 500 billion, with sources familiar with the transaction indicating that the price was well in excess of that figure.

IGIS is picking up the property leased to Coupang after online retail sales in South Korea exceeded offline transactions for the first time in 2023, accounting for 50.5 percent of the country’s KRW 177.4 trillion ($133.35 billion) in retail activity for the year, according to figures from the country’s Ministry of Trade, Industry and Energy.

KKR’s Incheon sale comes just over four years after a consortium led by the company completed a similar forward purchase disposal of a logistics facility in Gyeonggi province, south of Seoul, with the company’s APAC real estate chief John Pattar pointing to online shopping, at the time, as driving opportunities for investment in the sector.

“The rapid growth of e-commerce is transforming South Korea’s logistics sector, creating a growing demand for fully integrated and technology-enabled warehousing facilities that can support greater volumes and faster delivery,” Pattar said at the time of that 2020 transaction.

Renegotiated Deal

The Incheon sale was completed 20 months after IGIS, a frequent partner of KKR’s in earlier transactions, was chosen as the preferred bidder for the logistics centre in the city to the west of Seoul.

IGIS had agreed in January of last year to acquire the warehouse for KRW 600 billion on a forward commitment basis, according to a local media report, however, the price was said to have been renegotiated to KRW 500 billion after a fire broke out at the eight-storey warehouse in August.

At the reported compensation, IGIS is paying KRW 1.7 million per square metre for the property, which occupies a 55,000 square metre site in Incheon’s Seoknam area. Representatives of KKR and IGIS declined to comment on the transaction.

KKR acquired the site in 2018 from local energy production firm SK Incheon Petrochem Co for an undisclosed sum, according to a local report at the time, with the US firm said to be committing KRW 300 billion to the project.

Online retail sales in Asia’s fourth largest economy grew by 8.3 percent last year compared to 2022 levels, reaching a record high according to government data from Statistics Korea.

Average vacancy in Greater Seoul warehouses was 13.1 percent in December, up by 4.9 percent from the same month in 2022 according to data from JLL. Developers launched just over 1 million square metres of logistics space in the area around the Korean capital last year, after 2022 saw 796,612 square metres enter the market.

Long-Time Partners

While KKR’s 2020 warehouse sale in Gyeonggi province featured Seoul-based Pebblestone Asset Management as the buyer for that facility at Pyeongtaek Port, IGIS has emerged as the firm’s frequent deal partner in South Korea.

Just under a year ago the Korean asset manager agreed to acquire Namsan Green, a 57,574 square metre (619,721 square feet) office block in Seoul’s Jung district, from KKR for an undisclosed price.

In 2022, the two companies worked together to acquire a 30-storey tower in Seoul’s Yeouido district from local finance giant Shinhan Investment Corporation for KRW 639.5 billion

In 2018 the duo teamed up with Korea’s National Pension Service to acquire a KRW 2.1 trillion mixed-use project in Seoul’s Gangnam district.

More recently, the US firm, which had $553 billion in assets under management globally as of the end of 2023, joined hands with Hong Kong’s Weave Living to acquire a 14-storey hotel in the Korean capital, with the partners planning to reposition the property into a 157-unit apartment building.