Keppel Corporation, on Dec 19th, announced it was planning to purchase Samhwan Building, a freehold 15-storey office tower within Seoul, South Korea, for a cost that is KRW220 billion ($228.7 million).
Keppel Land Limited, Keppel Asia Macro Trends Fund IV (KAMTF IV) and KB Bank Discretionary Fund, have signed shareholders’ contracts (SHA) in conjunction with the joint venture corporation (JVCo), Gaenari (IV) and Gaenari (IV) in connection with the acquisition plan.
KAMTF IV and KB Bank Discretionary Fund is managed through Alpha Investment Partners Limited and Keppel Investment Management Co., Ltd respectively. Alpha Investment Partners and Keppel Investment Management Co. are wholly owned affiliates that are part of Keppel Capital Holdings.
In the SHA, Keppel Land and KAMTF IV will subscribe for shares in the JVCo as well as have shares of 55.93% and 44.07% respectively. Each of Keppel Land as well as KAMTF IV will also extend shareholders’ loans totalling approximately US$113.2 millions ($153.8 millions) towards the JVCo and will make an additional commitment to fund approximately US$4.84 million, proportional to their shareholding in the purchase of the property.
Following the successful completion of the deal and is expected to take place at Christmas Keppel Land will hold a 39.5% effective interest in Samhwan Building, while the remaining 31.1% and 29.4% effective stakes will get acquired through KAMTF IV and KB Bank Discretionary Fund respectively.
After the property is acquired and the necessary regulatory approval has been obtained, Keppel will conduct asset enhancement initiatives (AEIs) that include an extension horizontally, which will extend the building’s office space. The renovation of the existing space will also be carried out in an effort to boost the value of the property.
Samhwan Building currently has a total gross floor area (GFA) of 31,403 square meters. It is situated within Seoul’s Central Business District (CBD) located in Jongno-gu and is surrounded by Korean palaces that are on The UNESCO World Heritage List. The hotel has unbeatable views of the surrounding area. It’s just a 3-minute walk to the Anguk Station on the Seoul Subway line 3, and just 30 minutes from the other important commercial areas in Gangnam in Seoul and Yeouido located in Seoul.
Keppel in its announcement in its statement, states that it will incorporate sustainable features, like high-performance facades for buildings, energy-efficient heating and cooling systems and smart lighting systems. monitors of indoor environment quality, as well as intelligent building controls to increase the efficiency and performance.
“Keppel Land is thrilled to grow to South Korea through the acquisition of Samhwan Building in partnership with the private funds of Keppel Capital. This investment partnership does more than leverage Keppel’s strengths in real estate and asset management, but will also strengthen Keppel’s asset-light business model that leverages the funds of third parties to grow,” says Louis Lim as the chief executive officer of Keppel Land.
“When the refurbishment work is completed, Samhwan Building will be the centerpiece within South Korea of Keppel Land’s Sustainable Urban Renewal capabilities, which utilizes digital technologies to retrofit, ensure future-proofing and extend the life span of commercial buildings.” Lim adds.
“As the main financial and business center in South Korea, Seoul has experienced a rise in demand for office space of high quality within the city. We are thrilled to partner with Keppel Land in the purchase of Samhwan Building, a uniquely situated prime asset within the central business district which is well-positioned to take advantage of the increasing demand. Keppel Capital has managed close to $3.4 billion worth of assets with a gross floor space of 6.2 million square feet within South Korea since 2004, and we’re confident that our knowledgeable team with active asset management in the field and robust value-creation strategies will allow us to earn high returns for our fund as clients,” says Christina Tan who is the chief executive officer of Keppel Capital.
Keppel Corp. Shares Keppel Corp closed at $7.33 on December 16.