Blackstone, Mapletree Said Bidding on $730M Seoul Office Tower

While the words Korea and Singapore have dominated the news headlines this week, some of the world’s biggest real estate investors are focusing their gaze on the suddenly less exciting South Korea, where chances of a meaningful sale and purchase agreement may be more promising than a US-North Korean nuclear deal.

US private equity giant Blackstone and Singaporean developer Mapletree Investments are said to be among the bidders for a Seoul office tower owned by Samsung that could change hands for up to $730 million.

The auction for the 32-storey building has also drawn bids from a host of Korean asset management and brokerage firms, according to an account by The Korea Economic Daily. The tower forms part of the three-building Samsung Town complex in Seoul’s Seocho district, neighbouring Gangnam district, and is owned by Samsung C&T Corporation, a construction and trading arm of the sprawling Korean conglomerate.

The 81,117 square metre property, Samsung C&T Seocho, is expected to sell for about 9.7 million won ($9,007) per square metre, which would imply a total price tag for the asset of up to 787 billion won ($730 million), according to real estate finance sources cited by the newspaper. The estimated price per square metre for the rare large-scale asset in Seoul’s Gangnam area would be the highest-ever for a Korean commercial property deal.

Prime Gangnam Asset Draws at Least 8 Bids

Blackstone, which has around $450 billion of assets under management worldwide, is believed to have placed a bid for the tower by the June 7 deadline. The New York-based firm did not partner with a Korean company, according to the news account. It’s unknown whether Mapletree has formed a consortium with a domestic investor.

Other bidders on the property are said to include Korean firms IGIS Asset Management, NH Investment & Securities, Koramco Asset Management, Pebblestone Asset Management, Mastern Investment Management, and real estate investment trust JR AMC.

Completed in 2007, Samsung C&T Seocho is occupied by Samsung Fire & Marine Insurance, which sold off its headquarters in Seoul’s Jung district and relocated to the tower last year. The listed insurer’s lease is up in 2021. The other two buildings in the Samsung Town office park, which serves as Samsung’s Seoul headquarters, are tenanted by Samsung Life Insurance and Samsung Electronics.

The building sits in a prime location at the intersection of Gangnam Daero and Teheran Road, in the centre of the Gangnam business hub, and is connected to Gangnam Station on subway line 2. Property brokerage Savills Korea is managing the auction process, which is expected to conclude around August.

Transaction Could Shatter Unit Price Record

The estimated per unit selling price for Samsung C&T Seocho would break the previous record held by Gangnam N Tower, which is reported to have sold for an estimated 8.7 million won per square metre.

Nine commercial property transactions were completed in South Korea in the first quarter of 2018, totalling 1.3 trillion won ($1.23 billion), according to a report by brokerage Cushman & Wakefield. Major deals included the purchase of the Seoul office complex K-Twin Towers by Samsung SRA Asset Management for $656 million in February.

M&G Real Estate is reported to be close to buying Centropolis Towers, a new twin-tower office complex in the downtown Jongno district, for about $1 billion, marking the biggest single-asset property deal in Korean history.

Investment Heavyweights Circle Seoul Offices

For Blackstone – which was previously reported to be among the bidders for Centropolis Towers – a deal to acquire Samsung C&T Seocho would be its second acquisition of a Korean office asset since it bought Capital Tower in southern Seoul for $430.9 million in 2016.

Singapore-based Mapletree, which owns and manages over $35 billion of commercial and residential properties around the world, has a portfolio of 11 logistics centres in Seoul. This is the first time the company backed by Singapore government-linked Temasek Holdings is believed to have bid directly on a Korean asset, according to local media.

In addition to the reported bids from these cross-border investors, the Samsung C&T Seocho auction is notable for drawing strong interest from domestic institutional investors. IGIS Asset Management, which is Korea’s largest real estate fund manager, notched the city’s largest office transaction of 2017 by purchasing Signature Towers Seoul for $635 million last July.