Two asset management firms have submitted a challenge in the acquisition contest for 'Seoul Square,' which is mentioned to be valued at around 1 trillion won. Seoul Square, famous as the building where the drama 'Misaeng' was set, is considered a landmark office building near Seoul Station.
According to investment banking (IB) industry sources on the 29th, Capstone Asset Management and Korea Investment Real Asset participated in the main bidding for the sale of Seoul Square, held by ARA Korea Asset Management. The sale is overseen jointly by JLL Korea and Savills Korea.
Completed in 1977, Seoul Square is a large office asset with two basement levels and 23 above-ground floors, covering a total floor area of 132,806 square meters. It was previously used as the headquarters of Daewoo Group and was renamed Seoul Square after the group was disbanded. After extensive remodeling in 2010, it has attracted numerous corporations and is considered a representative trophy asset within the central business district (CBD).
Located in front of Seoul Station, Seoul Square is praised for its excellent transportation convenience, allowing access to subway lines 1 and 4, the Gyeongui Line, and the Airport Railroad, as well as KTX and GTX-A lines via internal corridors. As of the end of last month, it maintains an occupancy rate of 81.4%. Currently, domestic large corporations such as SK Shipping, Kyobo Life Insurance, KG Steel, as well as international companies like WeWork, Mercedes-Benz, and ExxonMobil are leasing space.
ARA Korea Asset Management is also considering converting part of the vacant space into accommodations such as hotels to increase the chances of a successful transaction. This is because a large-scale vacancy arose when 11Street transferred its office to Gwangmyeong last year. In response, the selling side is seeking a value-add strategy to resolve the vacancy by converting empty floors into a hotel to create stable revenue flow.
Previously, ARA Korea Asset Management acquired Seoul Square for 98.828 billion won from NH Investment & Securities in March 2019. The price per 3.3 square meters was around 24.6 million won. The reason ARA Korea Asset Management is promoting the sale of Seoul Square is that the maturity of the real estate fund established for the acquisition is approaching. The operational period of 'ARA Korea Specialized Investment Type Private Real Estate Investment Trust No. 1,' which owns Seoul Square, lasts until February 28 next year.
Industry sources expect that considering that trading prices for office spaces in Seoul's CBD are around 30 million to 35 million won per 3.3 square meters, the sale price of Seoul Square will exceed 1 trillion won. Last year, the D Tower Dongnimun was sold for 89.53 billion won (34.33 million won per pyeong) by Mastern Investment Management to NH Nonghyup REITs.