KKR-led group buys Seoul mixed-use property in $1.9b deal

Seoul, South Korea. Photo by Emile-Victor Portenart on Unsplash

Global buyout firm KKRKorean real estate fund manager IGIS Asset Management and the National Pension Service of Korea have acquired a mixed-use, under-development project in the Gangnam Business District in Seoul.

The property, purchased from a consortium led by local engineering firm Daor E&C, is expected to cost about KRW 2.1 trillion ($1.9 billion) in total.

Located in the heart of the Gangnam Business District, the property will primarily consist of prime grade office space, amenity retail space and a five-star hotel, with a gross floor area of 239,188 square meters and net leasable area of 121,707 square meters.

A 20-year master lease agreement for the 263-room hotel has been signed with Seoul-based hotel operator Shinsegae Chosun.

“We are thrilled to be investing in what we believe will be an iconic property in an excellent location, and to be teaming up with outstanding partners including IGIS and NPS to do so. We look forward to continue building on our global real estate platform by making quality real estate investments in South Korea and throughout Asia Pacific more broadly,” said John Pattar, member and head of real estate Asia at KKR.

The private equity firm’s investment is being funded from the $9.3-billion KKR Asian Fund III. This is KKR’s third real estate investment in South Korea. Its maiden investment was The-K Twin Towers, which the firm exited recently, selling to Samsung SRA in January 2018 for some $680 million.

KKR, with more than $7 billion in real estate assets under management, appointed Pattar, former CEO of CLSA Real Estate in Hong Kong, to oversee Asia Pacific real estate investments in May.

The firm said in an earlier statement that the region is a crucial part of its global real estate strategy.

Its partner IGIS recently closed its IGIS Strategic Fund I at its $350-million hard cap to invest in office, retail, mixed-use and logistics real estate in South Korea. National Pension Service of Korea is among the fund’s limited partners.

IGIS said the vehicle has completed two investments.

Sock-woo Jung, president of domestic investment at IGIS, commented on the latest deal: “We expect to develop the property not just as the best real estate asset in South Korea, but also as a landmark building in the global real estate market.”

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