KKR-Led Group Poised to Buy $1B Seoul Office Project in Record-Breaking Deal

A consortium led by US private equity giant KKR & Co is poised to land the biggest single-asset property deal in South Korean history by scooping up a twin office tower complex in Seoul worth an estimated 1.1 trillion won ($1 billion).

The consortium, which also includes South Korea’s IGIS Asset Management Co Ltd, has been selected as a preferred buyer of Centropolis Towers, a 134,310 square metre property due to complete in June, according to an account by The Korea Economic Daily.

The estimated price tag of the asset with 26 stories and seven underground stories equates to about $7,737 per square metre. Centropolis Towers is owned by domestic commercial developer CTCore, which decided last year to switch to a public auction from a private sale process.

The KKR-led consortium trumped bids by two other shortlisted contenders, M&G Real Estate – an arm of London-based Prudential – and a consortium of Korean firms NH Investment & Securities and LB Asset Management. The prime asset has also attracted bids from Blackstone Group and Korea Post.

New Project Accounts for 4% of Grade A Space in Central Seoul

The KKR-led group placed its bid shortly after KRR exited its first commercial property investment in South Korea by selling the K-Twin Towers for about 710 billion won ($688 million) last December. Samsung SRA Asset Management bought the Seoul office complex in a transaction that was finalised in February.

Savills Korea and Mateplus are managing the sale of Centropolis Towers, which is located at 5-1 Gongpyeong-dong in Seoul’s downtown Jongno district, nearby the Jonggak station of metro line 1. The deal comes amid a wave of construction activity in Jongno, as private developers transform the neighbourhood into a modern office and commercial hub.

The downtown core is only now catching up to Seoul’s other two business districts, Gangnam and Yeouido, which developed earlier despite being farther from the city centre. Centropolis Towers will account for some four percent of grade A office supply in the area upon its launch, which is also expected to boost vacancy rates, according to property consultancy Savills.

Savills notes that the downtown core has a more active leasing market than the Gangnam and Yeouido districts, and the strong tenant demand is expected to continue as office users upgrade their premises and co-working takes off.

KKR Ramps Up Asia Deals

New York-based KKR has emerged as one of the most active private equity players in Asia Pacific, where it opened its first office in 2006. The company, which has over $7 billion in real estate assets under management globally, last May closed the $9.3 billion Asian Fund III, the largest-ever private equity fund dedicated to the region.

KKR’s partner in this latest Seoul acquisition bid is Korea’s largest asset manager, IGIS Asset Management, which has a portfolio of about $13 billion. Last July, IGIS bought Signature Towers Seoul, a prime office property in Jung district (neighbouring Jongno), from Singaporean developer Ascendas-Singbridge for $635 million.

IGIS purchased the 17-storey twin tower office property on behalf of a new discretionary core fund backed by Korea’s National Pension Service (NPS), the world’s third-largest pension fund.