KOREIT Leads Acquisition of Its $310M Headquarters in Seoul’s Gangnam

Korea Real Estate Investment & Trust has acquired a stake in a Seoul office tower that serves as KOREIT’s headquarters in a transaction valuing the asset at KRW 445 billion ($310 million), according to market sources.

The deal is a recapitalisation of a KOREIT-managed fund that acquired KOREIT Tower in 2020 for KRW 360.5 billion, sources told Mingtiandi on Friday. As a tenant of the 19-storey building on the Teheran-ro commercial strip of Gangnam district, KOREIT exercised its right of first refusal to take a common equity interest in the asset while retaining its existing role as asset manager.

A new crop of investors, meanwhile, joined the buyout of the fund’s original limited partners, which included the Police Mutual Aid Association and the Government Employees Pension Service. The acquisition reflects an entry yield of 4 percent, the sources said.

Savills advised on the sale of the 2001-vintage building under a process first announced in July. The consultancy had not issued a statement on the deal’s financial particulars at the time of publication.

“KOREIT Tower is the seventh office sale we’ve successfully concluded on behalf of our clients in 2024, which reflects an expected 33 percent market share (by number of Seoul office transactions), in each case managing to achieve pricing at or above our initial guide,” said Crystal Lee, Savills Korea CEO and head of investment advisory.

100% Occupied

KOREIT Tower is fully occupied by six tenants with a weighted average lease expiry of more than six years. The building comprises 34,984 square metres (376,565 square feet) of gross floor area, including 26,803 square metres of offices, a 8,145 square metre data centre and a 35 square metre retail space.

The top 12 floors are occupied almost entirely by KOREIT and Dongbu Engineering & Construction (with beauty products maker Naos taking up the 11th floor). Levels 4 to 7 function as a data centre of Singapore-based operator Digital Edge. The other tenants are KOREIT Asset Management, NH Bank and Cafe Blue.

The acquisition price for the tower at 137 Teheran-ro translates to KRW 12.7 million ($89,000) per square metre of GFA, up 22 percent from KRW 10.4 million when the fund purchased the asset four years ago.

The Seoul office market continues to be among the best performing globally, Lee said, with average vacancy around 3 percent and a limited supply pipeline — particularly in Gangnam — providing strong rental growth in the short to medium term.

“With interest rates having fallen twice, from 3.5 percent to 3 percent, we expect to see continued interest from both the international and domestic investor base in 2025,” said the Savills Korea chief executive.

Teheran Calling

KOREIT Tower is the latest in a series of commercial properties to change hands along busy Teheran-ro this year.

Those assets include L7 Hotels Gangnam Tower, acquired in September by Lotte REIT from a vehicle controlled by Mastern Investment Management for $247 million. Situated at 415 Teheran-ro, the 30-storey building spans 33,584 square metres of floor area, with the L7 Hotel Gangnam occupying levels 9 through 27 while the first eight floors and three basement levels are for office use.

In April, Mingtiandi reported that Hanwha Asset Management sold the T412 office tower in Teheran-ro to local bedding manufacturer Allerman for $242 million. The 26,389 square metre building is nearly 87 percent occupied by tenants including Samsung financial affiliates and game developer Nexon Korea.