ARA Asset Management has agreed to buy Seoul Square, a prime building in downtown Seoul, in a trillion-won deal (€785m).
The Singapore-based manager has set up a new fund to hold the asset, and Korean investor, NH Investment & Securities, has become a co-investor in the fund.
The vendor, the KRI CR-REIT, a private single asset Korean Reit, acquired the 23-storey building from Morgan Stanley in 2011 reportedly for KRW800bn.
Anthony Kang, country head of ARA Korea, told IPE Real Assets that the building was sought by several parties over the course of last year.
According to industry sources, one of those parties was NH Investment in a joint venture with a fund, managed by Keppel Capital, but the deal fell over last November.
These sources said ARA Korea entered the picture late last year following an approach from NH Investment which has subsequently become a backer to the new ARA Korea fund.
On the seemingly high price paid for the building, Kang said: the dollar value may look big, but on a per unit basis, the Korean office sector is still “relatively more affordable” than in Singapore or Hong Kong.
Kang said the building has multiple tenancies leading to annual turnovers, giving the new trust an opportunity to improve cash flow.
He said there would also be rental upside in the retail component of the asset.
ARA entered the Korean market in 2014 acquiring a Macquarie platform.
Today, it operates six private REITs and five private funds (excluding this new fund) with total assets under management of KRW1.3trn.