Keppel Corporation, on Dec 19, announced that it has proposed to acquire Samhwan Building, a freehold 15-storey office tower located in Seoul, South Korea, at a purchase price of KRW220 billion ($228.7 million).
Keppel Land Limited, Keppel Asia Macro Trends Fund IV (KAMTF IV) and KB Bank Discretionary Fund, have entered into shareholders’ agreements (SHA) with the joint venture company (JVCo), Gaenari (IV), in connection with the proposed acquisition.
KAMTF IV and KB Bank Discretionary Fund are managed by Alpha Investment Partners Limited and Keppel Investment Management Co., Ltd respectively. Alpha Investment Partners and Keppel Investment Management Co. are both wholly-owned subsidiaries of Keppel Capital Holdings.
Under the SHA, Keppel Land and KAMTF IV will subscribe for shares in the JVCo, and will have a shareholding interest of approximately 55.93% and 44.07% respectively. Both Keppel Land and KAMTF IV will also extend shareholders’ loans of approximately US$113.2 million ($153.8 million) to the JVCo and undertake an additional funding commitment of up to US$4.84 million, in proportion to their shareholding interest, for the acquisition of the property.
Upon the completion of the transaction, which is slated to happen by the end of December, Keppel Land will hold a 39.5% effective interest in Samhwan Building, while the remaining 31.1% and 29.4% effective stakes will be acquired by KAMTF IV and KB Bank Discretionary Fund respectively.
Once the property has been acquired and once the relevant regulatory permit has been secured, Keppel will conduct asset enhancement initiatives (AEIs), which include a horizontal extension, to expand the building’s leasable office space. A refurbishment of the building’s existing spaces will also be conducted in a bid to enhance the property’s value.
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Samhwan Building currently has a total gross floor area (GFA) of 31,403 sqm. It is located in Seoul’s central business district (CBD) of Jongno-gu and surrounded by Korean palaces in the UNESCO World Heritage List. The building commands unparalleled views of the surroundings. It is a three-minute walk from the Anguk Station on the Seoul Subway line three, and a 30-minute drive from the other key business districts of Gangnam and Yeouido in Seoul.
Keppel, in its statement, says it will be incorporating sustainability features, such as high-performance building facades, energy-efficient cooling and heating systems, smart lighting systems, indoor environmental quality monitoring as well as intelligent building controls, to improve the asset’s operational efficiencies and performance.
“Keppel Land is excited to expand into South Korea through the acquisition of Samhwan Building in partnership with the private funds under Keppel Capital. This joint investment not only harnesses the group’s complementary strengths across real estate solutions and asset management but also reinforces Keppel’s asset-light business model which leverages third-party funds for growth,” says Louis Lim, CEO of Keppel Land.
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“When refurbishment works are completed, Samhwan Building will be a showpiece in South Korea of Keppel Land’s Sustainable Urban Renewal capabilities, which leverages digital technologies to retrofit, future-proof and extend the lifespan of commercial buildings,” Lim adds.
“As the business and financial hub of South Korea, Seoul has seen a rising demand for quality office spaces in the city. We are pleased to collaborate with Keppel Land on the acquisition of Samhwan Building, a uniquely located prime asset in the heart of the central business district, which is wellpoised to capture this growing demand. Keppel Capital has managed close to $3.4 billion of assets with gross floor area of 6.2 million sq ft in South Korea since 2004, and we are confident that our experienced team, active asset management on the ground and robust value creation strategies, will enable us to generate good returns for our funds’ investors,” says Christina Tan, CEO of Keppel Capital.
Shares in Keppel Corp closed at $7.33 on Dec 16.
