Korea’s NH Investment Selected as Preferred Bidder for $863M Seoul Tower

Korea’s NH Investment & Securities has taken a step toward acquiring one of Seoul’s largest office projects, after being selected as the preferred bidder for Tower 2 of the city’s Parc 1 complex, according to sources familiar with the project who spoke to Mingtiandi on condition of anonymity.

The Seoul-based finance titan has offered to pay approximately KRW 1 trillion ($863 million) to acquire the 162,217 square metre (1.75 million square foot) project from developer Y22 Project Financing Investment, Mingtiandi has come to understand, besting a field of both domestic and international competitors for the commercial asset.

Should the transaction be completed at the bid price, it would mark the third largest building trade ever in Korea, according to an account in local media outlet Pulse News, which broke the news late last week.

NH is said to be planning to use most of the space in the 53-storey office tower in Seoul’s Yeouido business district for it own offices after the project’s expected completion during the third quarter of 2020.

Savills Manages Seoul Tender

NH Investment, which had KRW 53.4 billion in assets at the end of 2018, had reportedly been eyeing the office tower in an area often referred to as Korea’s Wall Street for some time, with the pursuit having begun in earnest during the fourth quarter of 2019.

In October property consultancy Savills, which is responsible for international marketing for the commercial project, began conducting a tender for Tower 2 at Parc 1. The selection of NH Investment as the preferred bidder is understood to have come last week, with the two parties now locked in exclusive negotiations.

The asset, which is already Seoul’s fifth-tallest tower, is part of what will be Seoul’s largest mixed-use complex when the development’s pair of office blocks, eight-storey shopping mall and 30-storey hotel are completed next year.

With much of Seoul’s office stock already showing its age, Tower 2 is bringing to market column-free floor plates which measure over 3,400 square metres by gross floor area and three metre interior ceiling heights.

Local news accounts in 2016 had already indicated NH Investment’s intention to buy Tower 2 of the complex, after the firm had been involved in arranging finance for the project’s construction.

Mixed-Use Complex Nears Completion

The 629,047 square metre Parc 1 project originally broke ground in 2008, before work stopped in 2011. Construction got under way again in early 2017, shortly after Canada’s Brookfield Asset Management teamed up with Chinese sovereign wealth fund CIC to buy the neighbouring Seoul IFC complex for $2.7 billion in November 2016.

Y22’s impending sale of Tower 2, comes after the South Korean developer had earlier agreed to masterlease the entire 69-storey Tower 1 at Parc 1 to steel maker Posco.

In 2017 France’s Accor had signed up to manage the 30-storey hotel portion of the Rogers Stirk Harbour + Partners-designed complex, which is scheduled to open next year as the 326-key Fairmont Ambassador Seoul, and Hyundai Department Store – the retail division of the South Korean conglomerate – will be managing the eight-storey mall.

NH Notches Latest Mega-Office Deal

Should NH Investment secure its Yeouido district prize, it would come around one year after the finance firm teamed up with Singapore’s ARA Asset Management for Korea’s biggest office deal of 2019.

In February last year a fund managed by ARA agreed to buy the Seoul Square building in the central business district for a reported KRW 1 trillion, with that fund said to be backed by NH Investment.

After selling its former headquarters to Mastern Investment last year for KRW 200 billion, NH Investment is ready to relocate its headquarters to Parc 1, while making an unspecified portion of the building available for lease by other tenants.

Rents in the Yeouido business district were averaging KRW 80,600 per pyeong (3.3 square metres) in the fourth quarter of 2019 – up 1.4 percent compared to the same period a year earlier as vacancy in the submarket grew to 9.4 percent, from 6.7 percent during the previous three months. Rents at the neighbouring IFC complex currently average KRW 110,000 per pyeong per month, according to Savills.

However, the roll out of Parc 1, along with the upcoming completion of the Yeouido Post Office and KB Finance Town projects is expected to hold down rents in the submarket during 2020.