Mirae Asset Global Investments moves swiftly to find a new owner for State Namsan, the “biggest prize” in CBD office sales [fn Market Watch]

[Financial News] Mirae Asset Global Investments is stepping up plans to sell State Tower Namsan after selecting sale advisers. With Pine Avenue Building A and K-Twin Tower changing hands one after another this year, State Tower Namsan is seen as the biggest prize in next year’s central business district (CBD) office sales.
According to investment banking (IB) industry sources on the 11th, Mirae Asset Global Investments recently selected a consortium of JLL (Jones Lang LaSalle) Korea and Deloitte Anjin as sale advisers for State Tower Namsan. A CBRE Korea-Savills Korea consortium and Cushman & Wakefield Korea also competed for the advisory role. JLL Korea also advised on the sale alongside Cushman & Wakefield when Mirae Asset Global Investments acquired the building in 2019. It is now handling the sale process again, just over seven years after the acquisition.
State Tower Namsan, at 100 Toegyero in Jung District, Seoul, was completed in June 2011. It has six basement levels and 24 above-ground floors, with a gross floor area of 66,799.1 square meters. It is located between Myeong-dong Station and Hoehyeon Station on Subway Line 4. Tenants include Korea Investment Corporation (KIC), BMW Korea, Bain & Company and Pfizer Korea, and the building’s current occupancy rate is 94.6%.
The building’s value has risen each time it has changed hands. Shinhan BNP Paribas Asset Management acquired it in a pre-sale in 2012 for about 400 billion won, and the Abu Dhabi Investment Authority (ADIA) bought it for about 530 billion won at the end of 2014. When Mirae Asset Global Investments acquired it from ADIA in 2019, the price was 588.6 billion won, or about 29.12 million won per 3.3 square meters. At the time, that was the highest price for a CBD office. Mirae Asset Global Investments used funds from KIC, which was headquartered in the building, and a blind fund of the Korea Post Office to acquire it.
The market is citing a sale price of around 40 million won per 3.3 square meters. At that rate, the sale price would be in the 800-billion-won range, at least 200 billion won above the 2019 acquisition price. Recent large CBD transactions at similar prices are cited as evidence. Pine Avenue Building A, the Shinhan Card headquarters, traded for about 40.2 million won per 3.3 square meters at the end of September. On October 23, Samsung SRA Asset Management signed a sale and purchase agreement with IGIS Asset Management for K-Twin Tower in Gwanghwamun. The transaction was valued at 1.05 trillion won, or about 41.37 million won per 3.3 square meters.
The office investment market is also favorable. According to Newmark, office transactions in Seoul totaled 22.9 trillion won last year, a record high. Cushman & Wakefield reported that the average vacancy rate for Grade A offices in Seoul was 5.0% in the third quarter of this year, down 0.8 percentage points from the previous quarter. The analysis is that the large volume of new space delivered in the CBD in the second quarter is gradually being absorbed. The recovery of Myeong-dong’s commercial district amid an increase in foreign tourists, along with more active hotel transactions nearby, is also helping to boost asset values.
The future of KIC, a major tenant, is a wild card. The possibility of KIC relocating is being discussed amid debate over further relocations of public institutions to regional areas. If the key tenant leaves, the increased vacancy risk could affect prospective buyers’ price assessments.
An IB industry source said, “Transactions involving Pine Avenue Building A and K-Twin Tower have established CBD prime office prices in the 40-million-won-per-3.3-square-meter range,” adding, “Given the recovery of Myeong-dong’s commercial district and the high occupancy rate, domestic and international prospective buyers will take a strong interest.”

[email protected] Kang Gu-gwi Reporter