Rene Square sale bid to be held today; 4–5 bidders expected [fn Market Watch]

[Financial News] Rene Square, a newly built office building in Euljiro, Seoul, is holding a sale bid today. Around 20 prospective buyers took part in site tours and due diligence, and 4–5 bidders are expected to compete. The Serious Crime Investigation Agency will occupy the entire building.
According to the investment banking (IB) industry on the 30th, Capstone Asset Management and sale advisers Colliers Korea and Savills Korea will hold the sale bid for Rene Square today. Multiple bidders are expected to compete. The deal could also close within the year.
Rene Square is a newly built office facility in the Supyo-dong area of Jung-gu, Seoul, with seven basement levels and 17 above-ground floors. It occupies a prime location in Seoul’s Central Business District (CBD), adjacent to Euljiro 3-ga Station, and was built by Hyundai Engineering Co., Ltd. The key to the deal is tenant stability. The Serious Crime Investigation Agency leased the entire office facility for its headquarters and Seoul office, bringing the office occupancy rate to 100%. In effect, the government agency’s tenancy has largely eliminated the initial vacancy risk that is the biggest concern for a newly built office.
The Serious Crime Investigation Agency uses the building under a five-year lease with an option to extend. The monthly rent is reportedly about KRW 2.15 billion, with maintenance fees of about KRW 950 million. Annual rent alone exceeds KRW 25 billion by a simple calculation.
Rene Square secured the Serious Crime Investigation Agency as its anchor tenant even as concerns about vacancies mounted amid a succession of new office supply in the CBD this year. Its prime location right next to a subway station and its large floor area are also cited as investment attractions.
Real estate IB industry insiders are watching for the possibility that the sale price will come in at around KRW 700 billion. With transaction prices for prime CBD offices reaching at least KRW 35 million per pyeong, analysts say the stability of a government agency tenant could help support the price.
Rene Square previously attempted to sell once, but the deal fell through because the parties could not agree on the price.
Sale listings are currently accumulating in the CBD, including State Namsan, being sold by Mirae Asset Global Investments Co., Ltd., and Namsan Sowol Tower, being sold by IGIS Asset Management.
A real estate IB industry official said, “This deal will be an example of how the value of large urban offices anchored by public-sector tenants is assessed,” adding, “As government agency tenancy, a newly built prime office and a location right next to a subway station come together, more prospective buyers are considering investing.”

[email protected] Kang Gu-gwi Reporter