LaSalle Sells Greater Seoul Shed to Korea’s PAMCO for $95M

LaSalle Investment Management has sold a logistics facility on the outskirts of Seoul to local fund manager Pacific Asset Management Co. (PAMCO) for KRW 125 billion ($95 million).

LaSalle sold the 39,927 square metre (429,770 square foot) Logiport Osan Logistics Centre in Gyeonggi province, managed by its Logiport logistics arm, in a deal completed this month, according to disclosures seen by Mingtiandi.

An investment prospectus filed by PAMCO last month showed the Seoul-based asset management firm is financing its acquisition in part with KRW 65 billion in mortgage loans from an undisclosed lender, with the remainder paid in equity through its blind fund, Pacific Logistics Specialty No. 1 REIT, which will be holding the asset. PAMCO and LaSalle closed the deal earlier this month at a final price equivalent to KRW 3,131 per square metre of built area.

The disposal has freed up some cash for LaSalle after the Chicago-based investment giant acquired two warehouses in Icheon six months ago with a combined gross floor area of 53,942 square metres for an undisclosed sum.

Leased-Up and Ready

Located at 83-9 Won-dong near the Gyeongbu Expressway, which provides direct access to Seoul, Osan Logiport Logistics Centre offers a mix of ambient and cold temperature storage facilities and 1,000 square metres of ancillary offices spread across three underground levels and three above-ground floors.

The facility, currently 95 percent occupied, features third-party logistics provider Jette as the anchor tenant under a five-year lease agreement that started in December 2022, when the facility became operational.

PAMCO said in its investment prospectus that it expects the acquisition to generate stable rental income and dividends for investors in the Pacific Logistics Specialty No. 1 REIT.

“After purchase, the existing lease contract will be inherited and the asset will be operated for rental income. We plan to secure stable dividend income by minimising the risk of vacancy,” an English translation of the document read.

LaSalle representatives declined to comment on the transaction when contacted by Mingtiandi.

PAMCO owned six logistics projects worth KRW 1.7 trillion across South Korea as of the end of last year, making the firm the ninth biggest investor in the country’s logistics real estate market, according to Colliers data.

With ADF Asset Management, a blind fund created by Korea’s National Pension Service and the Public Officials Benefit Association, ranked as Korea’s biggest shed investors, PAMCO ranked just above local fund manager Koramco Asset Management which held the tenth spot.

Within Gyeonggi province, which surrounds Seoul, PAMCO also owns the Goyang Samsong Regional Logistics Center located in Goyang city’s Deokyang-gu district based on a local media account.

Supply Slows

LaSalle is offloading the Osan facility a half-year after acquiring a pair of assets closer to the capital city.

Dubbed Logiport Bubal Center-1 and Logiport Bubal Center-2, the two new properties are located in Icheon’s Bubal district in the southeastern corner of Greater Seoul, and were completed in 2021 and 2022. LaSalle acquired the two properties on behalf of a joint venture with an unnamed Middle Eastern sovereign wealth fund.

Also within Icheon, the fund manager expects to complete construction of its 34,684 square metre Logiport South Icheon facility this year as it ramps up its presence in the market seven years after choosing the city to develop its first-ever logistics project in Korea in 2017. LaSalle now has KRW 1.7 trillion in assets under management in Korea.

Trades of logistics properties across Korea dropped 58 percent to KRW 6.4 trillion last year from KRW 15.1 trillion in 2022, as forward-purchase investments slowed from their high point from 2020 through 2022, according to Colliers data.

A glut of newly built sheds also muted investment activity last year. The property agency noted that the volume of newly registered warehouses across the country rose to a record high of 114 facilities in 2023, or 37 percent higher than the 83 facilities registered the year prior.

“After the new supply of logistics centers reached its peak in 2023, it is expected to stabilize at a lower level in 2024 than 2023 as there are an increased number of projects that have permits but have yet to begin construction,” Colliers said. “With rising interest rates and difficulty in financing projects, the supply of logistics centers may continue to be delayed, and further delay is expected depending on the construction kick-off.”