PGIM Real Estate this week reported that it has completed the acquisition of the T Tower prime office building in Seoul’s central business district.
The real estate investment business of Prudential Financial investment management unit PGIM first announced in November that it was purchasing the 28-storey grade A office building in South Korea’s capital city for 184 billion won (now $159 million).
PGIM Real Estate is one of a growing number of global private equity firms, including Blackstone and Brookfield, turning their attention to South Korean property assets during the last year.
PGIM in Joint Venture with Korean Asset Manager
“The acquisition of a high-quality office asset like T Tower provides our investors with an excellent potential to capitalize on Seoul’s mid-term office market recovery, while benefitting from an active leasing strategy,” Benett Theseira, head of Asia Pacific for PGIM Real Estate said in a prepared statement.
Theseira’s firm signed a purchase agreement for the T Tower with Midas Asset Management in early December. At the time PGIM indicated that it expects to profit by reselling the building after attracting more tenants to the circa 2010 office tower, which is now just over 50 percent occupied.
PGIM made the investment on behalf of institutional investors, which the company declined to name. The acquisition was done jointly with Korea’s largest asset management company, IGIS Asset Management, with the local partner also responsible for managing and leasing the property following this week’s closing.
Betting on an Upswing in Downtown Seoul
In a statement, the company pointed to infrastructure projects currently under way in Seoul’s downtown as helping to revitalise the T Tower’s neighborhood. The 41,000 square metre building is located in the southern section of Seoul’s central business district. Completed in 2010, the property is within walking distance of Seoul Station, a primary terminus for regional rail and bus connections.
The improvements in downtown Seoul are part of the reason the city is gaining more attention from global investors. In November last year Canadian investment shop Brookfield Asset Management beat out Stephen Schwarzman’s Blackstone Group and Singapore’s Ascendas by acquiring the International Finance Centre Seoul from AIG Global Real Estate for $2.7 billion. The bid for the commercial complex, was said to be backed by sovereign wealth fund China Investment Corporation.
Blackstone made is first investment in Korea’s prime office market in June, when it purchased the Capital Tower in southern Seoul’s Yeoksamdong area for 470 billion won.
PGIM Expands Asia Holdings
The T Tower acquisition expands PGIM Real Estate’s footprint in the region, where it manages a portfolio of over $7 billion across Asia Pacific, and marks PGIM Real Estate’s return as an active investor to the Seoul market, where they have invested in more than nine transactions since 2001.
In 2016 the company completed more than $12 billion in transactions worldwide including acquiring Waterfront Place in Shanghai as well as the Puchong Kinrara Development in Kuala Lumpur. The company also last year picked up the Abercrombie & Fitch Ginza Building and the Italian Cultural Institute Building in Tokyo.
Prudential Financial rebranded its $1 trillion asset management division as PGIM last year. As part of that transition, the company’s real estate unit, which formerly operated in the Americas, Japan and Korea as Prudential Real Estate Investors, and as Pramerica Real Estate Investors in the rest of the world, was unified under the PGIM Real Estate banner. The real estate investment firm now has gross assets under management of $66 billion, according to its website.