Keppel REIT Management, part of Keppel Capital, has acquired an office building from PGIM Real Estate in Seoul for KRW252.6bn (€197m).

Keppel said it had negotiated the deal with a value-add strategy fund managed by PGIM Real Estate to acquire an approximate 99.38% stake in T Tower, a fully-leased building in Seoul’s central business district.

Keppel Capital will own the remaining 0.62% stake in the complex, which will be managed by Keppel Investment Management.

The acquisition further deepens Keppel Capital’s presence in the South Korean capital.

Christina Tan, CEO of Keppel Capital, said Keppel Capital had managed close to S$3bn (€1.97bn) in assets with a gross floor area of 5.2m sqft in South Korea since 2004.

These included CBD commercial offices such as Seoul Square, Jongno Tower, Pacific Tower and Center Place.

Paul Tham, CEO of Keppel REIT Management, said the acquisition was in line with Keppel REIT’s long-term strategic growth plan.

The vehicle owned assets in several countries, valued at S$8.4bn, he said.

“While Keppel REIT’s portfolio will remain anchored by our prime CBD assets in Singapore, we believe that owning assets across Singapore, Australia and South Korea will enhance our geographical and income diversification.”

As such, the vehicle would have greater stability and further opportunities for growth in the long term, Tham added.

Tham said Seoul had a deep office market with high transaction volumes, driven by both strong domestic demand and growing interest from international investors.

“T Tower will enable Keppel REIT to benefit from potential capital value appreciation and rental growth amidst steady leasing demand and limited upcoming supply,” he said.

The acquisition is expected to be completed during this quarter and will be funded with debt, including proceeds from the issuance of the convertible bonds.