DWS had acquired the Gimpo Seonggwang Logistics Center in 2020
With investors anticipating a rebound in Korea’s logistics market, Blackstone has teamed with Seoul-based Pebblestone Asset Management to acquire a warehouse facility near the Korean capital for KRW 83.5 billion ($60.4 million).
The US investment giant has invested in a fund managed by Pebblestone to purchase the Gimpo Seonggwang Logistics Center from DWS, the asset management affiliate of Deutsche Bank, in a deal which closed earlier this month, according to sources familiar with the transaction who spoke with Mingtiandi.
The deal will add 29,998 square metres (322,896 square feet) of logistics space to Blackstone’s Korean portfolio, as market analysts see international investors scooping up logistics bargains in a market which experiencing a downturn, which some see as temporary. Pricing for the transaction was captured by data provider MSCI Real Assets.
“Seoul’s industrial investment activity has improved, alleviating concerns about oversupply in the market,” said Judy Jang, associate director of research and advisory services at Colliers Korea. “Despite increasing vacancy rate and falling rents currently, Korean logistics centers are attracting interest from overseas investors as the medium to long-term outlook indicates a supply shortfall and rising demand.”
Looking Long Term
Blackstone and Pebblestone are paying the equivalent of KRW 2.8 million per square metre for the four-storey facility in the Gyeonggi Province city of Gimpo. The logistics centre, which also has a basement level, occupies a 9,106 square metre site in the Gimpo Gochon Logistics Complex, a popular shipping hub around 30 kilometres (18.6 miles) south of Seoul.
Chris Kim, Head of Blackstone Real Estate Korea
DWS had acquired the Gimpo Seonggwang Logistics Center from Koramco OBO KB Real Estate Trust in 2020 for KRW 63.9 billion, according to MSCI data, with the company reported to in July to have been in negotiations with Pebblestone and Blackstone for the sale of the asset. DWS had not responded to Mingtiandi inquiries by the time of publication, while representatives of the buyers declined to comment.
With warehouse vacancy having risen in 2022 and 2023 in the face of new supply, trades of Korean logistics properties fell last year. However, with Korean e-commerce continuing to expand, investors remain confident in demand for logistics space, according to Colliers.
The property consultancy also points out that, after new supply of logistics facilities hit an all-time high in 2023, rising construction costs and development approval challenges are expected to reduce supply this year, opening up opportunities for investors.
Foreign Investors Jump In
The emerging mismatch between logistics supply and demand has brought some of the world’s largest investors into Korea’s warehouse market with Warburg Pincus last year teaming up with Seoul-based third party logistics provider and warehouse developer MQ to establish shed platform Qube Industrial in Seoul.
More recently, in August of this year LaSalle Investment Management acquired a pair of logistics facilities in the Greater Seoul area for a total of $450 million to add 385,944 square metres of gross floor area to its Korean industrial portfolio.
Pebblestone chief executive and managing partner Terry Hwang is well acquainted with the seller in the Gimpo transaction, having served as president and chief executive for Korea at Deutsche Asset Management, the predecessor to DWS from 2008 through 2015.
In December of last year Pebblestone teamed up with AEW Capital Management to purchase a logistics facility in Incheon for KRW 310 billion, according to local news reports.
Blackstone has been ramping up its operations in Korea with the company having recently opened a satellite office in the NPS’ hometown of Jeonju, while its national headquarters remains in Seoul.
In March this year Blackstone sold the Arc Place office building in Seoul to local fund manager Koramco for just over KRW 792 billion in one of the country’s largest trades of a single real estate asset this year.
Note: an earlier version of this article indicated that Blackstone planned to open an office Jeonju and that the Gimpo Seonggwang Logistics Center was occupied in part by Coupang and SF Express . The text has been updated to show that the office is already open, and to remove the references to tenants. Mingtiandi regrets the errors.
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