New Serious Crime Investigation Agency Headquarters, Renais Square, Draws About 20 Prospective Buyers [fn Market Watch]

[Financial News] The sale of Renais Square, a newly built office building in Euljiro, Seoul, fully leased by the Serious Crime Investigation Agency, is gathering pace. About 20 prospective buyers are expected to participate in property tours and due diligence this week. Bidding is also scheduled for October, drawing market attention to whether the transaction will be completed.
According to investment banking industry sources on the 15th, CAPSTONE Asset Management distributed the investment memorandum (IM) on the 14th and began contacting potential investors in Korea and abroad. Colliers and Savills Korea are advising on the sale. Property tours and due diligence will take place this week, followed by bidding in October. The transaction could potentially close by the end of the year.
Renais Square is a newly built office facility in Supyo-dong, Jung District, Seoul, with seven basement levels and 17 floors above ground. It occupies a prime location in Seoul’s Central Business District (CBD), adjacent to Euljiro 3-ga Station, and was constructed by Hyundai Engineering. The key attraction of the transaction is tenant stability. After the Serious Crime Investigation Agency leased the entire office facility for its headquarters and Seoul office, the building achieved a 100% occupancy rate. In effect, the government agency’s tenancy eliminated the initial vacancy risk that is typically the biggest burden for a newly built office property.
The Serious Crime Investigation Agency is using the building under a five-year lease with an option for an additional extension. The monthly rent is reportedly about 2.15 billion won, while management fees are approximately 950 million won. Annual rent alone therefore exceeds 25 billion won by a simple calculation.
Renais Square secured the Serious Crime Investigation Agency as an anchor tenant even as concerns about vacancies grew amid a series of new office supplies in the CBD this year. Its prime transit-oriented location and large floor area are also considered investment attractions.
Real estate investment banking circles are watching the possibility that the sale price will be formed at around 700 billion won. With CBD prime office transaction prices reaching more than 35 million won per pyeong, analysts say the government agency’s stable tenancy could help support the property’s value.
Renais Square previously went through one sale process, but the transaction fell through because the seller and buyers could not agree on the price. This time, however, interest from prospective buyers is considered stronger, with about 20 parties expected to participate in property tours and due diligence. An official in the real estate investment banking industry said, "This transaction will serve as an example of how the value of a large downtown office building backed by a public-sector tenant is assessed," adding, "More prospective buyers are considering an investment as government-agency tenancy, a newly built prime office, and a prime transit-oriented location come together."
[email protected] Kang Gu-gwi Reporter