Private equity giant KKR is set to expand its footprint in the South Korean real estate market by teaming up with long-time local partner IGIS Asset Management to acquire Shinhan Investment Corporation’s Seoul headquarters for 639 .5 billion KRW ($487 million).
Shinhan Investment announced July 18 that he had signed a contract to sell the 30-storey tower in the capital’s Yeouido banking district. The Shinhan Financial Group division had identified the KKR-IGIS consortium as the last bidder for good in May.
The building offers 70,169 square meters (755,293 square feet) of gross floor area, with the new owners willing to pay more than KRW 9.1 million ($6,942) per square meter for their price.
Local media reports that KKR and IGIS are acquiring the 30-story office tower as the first asset held by a recently established fund management joint venture targeting value-added real estate investments in the country.
Free up capital
In its announcement of the deal, which the parties expect to complete this month, Shinhan Investment said the sale of the office building would turn crisis into opportunity by providing the company with cash to develop new businesses. new businesses and increase its income from investment banking.
The sale price for the property, which Shinhan acquired in its 2002 takeover of rival brokerage firm Good Morning Securities in 2002, is 3.6 times the asset’s book value of KRW 180 billion, the Korea Economic Daily reported.
Shinhan Investment plans to re-let the 1995 tower after the deal closes this month. The company’s consolidated shareholders’ equity in March stood at more than KRW 5.1 billion, a figure that is expected to rise to around KRW 5.5 trillion thanks to the gains from the sale.
After Shinhan’s sale of the building in Seoul’s Yeouido financial district is completed, only three of South Korea’s top 10 brokerage firms will still own their buildings, according to local media, with Capstone Asset Management having acquired Yuanta Securities’ headquarters in central Seoul from South Korea. NH-Amundi Asset Management for KRW 306 billion in a deal struck earlier this month.
KKR dives in Korea
KKR’s combination with IGIS is described as the first joint venture by a Korean real estate investment manager with a foreign company, with each partner holding a 50% stake, according to a report by Korean Economic Daily.
The New York-based private equity firm’s relationship with IGIS dates back to at least 2018, when the partners joined the National Pension Service of Korea to acquire a KRW 2.1 trillion ($1.9 billion) mixed-use project on the site of the former Renaissance Hotel in Seoul’s Gangnam district.
In 2020, KKR and IGIS partnered with local developer SK D&D to acquire the 23-story Namsan Square office tower in Seoul for KRW 500 billion ($420 million).
KKR representatives had not responded to Mingtiandi’s requests for comment at the time of publication, however, the company has experience doing business with Shinhan Financial. After signing a partnership deal with the Korean group chaired by Cho Yong-byoung in 2018, the Manhattan-based buyout firm helped its ally raise two bespoke private funds targeting a combined size of $200 million.
“By raising the personalized fund with KKR, we were able to seize a good opportunity to improve the profitability of our group’s alternative investments”, Cho said in 2020. “To enhance our group’s capability in global alternative investments to be the best in the world, we will strengthen our partnership with global asset management firms such as KKR.”
In 2020, Shinhan, along with fellow Hana Bank, provided a total of $63 million in senior loans to finance KKR & Co.’s $5.6 billion acquisition of British waste management company Viridor. , according to a statement from Shinhan on December 4 this year.
Asian deals heat up
KKR has handled Asian transactions this year as the company strengthens its presence in the region’s property market under the leadership of John Pattar.
In April, KKR completed the acquisition of the Twenty Anson office tower in downtown Singapore, paying just under S$599 million ($441.6 million) to the Boston-based fund manager, AEW, for the 20-story property in the Tanjong Pagar area, according to familiar sources. with the transaction that spoke to Mingtiandi. The deal marked KKR’s first office investment in the city-state.
A month earlier, the major private equity firm had agreed to acquire a Japanese REIT manager jointly owned by Mitsubishi Corporation and UBS Asset Management for $2 billion in an all-cash balance sheet transaction without using customer funds.