A consortium acquired by buyout major KKR & Co has acquired Namsan Square, an office tower in the central business district of Seoul, from a real estate investment trust operated by domestic asset manager KOREIT for an undisclosed amount.
KKR joins IGIS Asset Management, Korea’s largest real estate fund manager, and SK D&D, a local real estate developer, in acquiring the office building, which occupies more than 75,000 square metres across 23 floors of premium office and retail space.
The acquisition comes less than a month after KKR announced that another consortium led by it will sell BLK Pyeongtaek Logistics Center, a newly developed multi-tenant modern logistics facility, to Korean real estate asset manager Pebblestone Asset Management.
In a statement, KKR said the consortium plans to upgrade the building facade and retail arcade of Namsan Square to enhance the workspace environment, without disrupting existing tenants. The building’s tenants include multinational and South Korean corporations, as well as government organisations.
According to a report by the Korean news site The Bell, South Korea’s National Pension Service (NPS) will exit its investment in Namsan Square, 10 years after acquiring the property. The total price of the building is approximately 500 billion won ($411 million) and NPS is reportedly expected to make at least 180 billion won ($148 million) of profit through the sale.
The NPS purchased the building and land from Macquarie Bank for about 310 billion won ($255 million) or around 13 million won per 3.3 square meters, in 2009.
Namsan Square is KKR’s fourth real estate investment in South Korea. The global PE firm’s previous investments include The-K Twin Towers, a prime office complex in Gwanghwamun; Renaissance Parc, a mixed-use real estate development in Gangnam; and the BLK Pyeongtaek Logistics Center development.
“South Korea holds terrific potential for real estate investment, and the market is a core part of KKR’s regional real estate strategy,” David Cheong, director at KKR’s Asia Real Estate team, said.
The buyout major had in July announced an initial close for its first Asia real estate fund without revealing the fund size or how much it raised for the first close. The firm’s first Asia realty fund is said to target a $1.5-billion corpus.
As of December 31, 2019, KKR has committed more than $1.4 billion of equity in its pan-regional real estate strategy.