Keppel Corporation, on Dec 19 announced it was planning to purchase Samhwan Building, a freehold 15-storey office building 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 entered into shareholder’s contracts (SHA) in conjunction with the joint venture corporation (JVCo), Gaenari (IV) as part of the acquisition proposal.
KAMTF IV and KB Bank Discretionary Fund are administered through Alpha Investment Partners Limited and Keppel Investment Management Co., Ltd respectively. Alpha Investment Partners and Keppel Investment Management Co. are wholly owned companies that are part of Keppel Capital Holdings.
In the SHA, Keppel Land and KAMTF IV will subscribe for shares in the JVCo and will hold an interest in the JVCo’s shareholding of around 55.93% and 44.07% respectively. Each of Keppel Land as well as KAMTF IV will also extend shareholders’ loans of around US$113.2 millions ($153.8 millions) towards the JVCo and make an additional commitment to fund approximately US$4.84 million, according to their shareholding interests in the purchase of the property.
Following the successful completion of the deal and is expected to take place at close of the month Keppel Land will hold a 39.5% effective interest in Samhwan Building, while the remaining 31.1% and 29.4% effective stakes will be purchased through KAMTF IV and KB Bank Discretionary Fund respectively.
After the property is purchased and the necessary regulatory approval has been obtained, Keppel will conduct asset enhancement initiatives (AEIs) including an extension horizontally, which will extend the building’s office space. The renovation of the building’s spaces is also planned in order to increase the value of the property.
Samhwan Building currently has a total gross floor area (GFA) of 31,403 square metres. It is situated at the heart of Seoul’s downtown business district (CBD) located in Jongno-gu and is surrounded by Korean palaces that are on The UNESCO World Heritage List. The building has breathtaking views of the surrounding area. It’s a walk of three minutes to the Anguk Station on the Seoul Subway line 3, and just 30 minutes from the other important business areas that include Gangnam as well as Yeouido within Seoul.
Keppel in its announcement the company has stated that they is incorporating sustainability-related features like high-performance building facades, energy efficient heating and cooling systems as well as smart lighting systems. Indoor environmental monitoring, as well as intelligent building controls to increase the efficiency and performance.
“Keppel Land is thrilled expanding in South Korea through the acquisition of Samhwan Building in partnership with the private funds that are part of Keppel Capital. The partnership investment will not only leverage Keppel’s strengths in real estate services and asset management, but it will also strengthen Keppel’s asset-light business model, which makes use of the growth of third-party funds,” says Louis Lim the CEO of Keppel Land.
“When the refurbishment work is completed, Samhwan Building will be an iconic symbol of South Korea of Keppel Land’s Sustainable Urban Renewal capabilities, that utilize digital technology to retrofit, secure the future and extend the life span of commercial buildings.” Lim adds.
“As the financial and business center for South Korea, Seoul has witnessed a growing demand for high-quality office space within the city. We are thrilled to partner with Keppel Land in the purchase of Samhwan Building, a uniquely situated prime asset within the business district in the center, that is well-positioned to meet the growing demand. Keppel Capital has managed close to $3.4 billion in 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 and active asset management in the field and our robust value-creation strategies will allow us to create positive returns for our funds and clients,” says Christina Tan the Keppel Capital’s CEO. Keppel Capital.
The shares of Keppel Corp closed at $7.33 on December 16.