Korea Real Estate Investment & Trust Co., Ltd. to Acquire ‘Rene Square,’ Home to the Serious Crimes Investigation Agency [fn Market Watch]

[Financial News] Korea Real Estate Investment & Trust Co., Ltd. is set to acquire Rene Square, a newly built office in Euljiro, Seoul. Roughly 20 prospective buyers took part in site tours and due diligence, and it beat Korea Asset Trust and FL Asset Management in the bidding. The Serious Crimes Investigation Agency (SCIA) leases the entire building.
According to investment banking (IB) industry sources on the 13th, CAPSTONE Asset Management and sale advisers Colliers Korea and Savills Korea notified Korea Real Estate Investment & Trust Co., Ltd. that day that it had been selected as the preferred bidder for Rene Square. It was reported to have offered about 37 million won per 3.3 square meters. The price could be adjusted when the memorandum of understanding (MOU) is actually signed.
Rene Square is a newly built office facility in the Supyo-dong area of Jung District, 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 this deal is the stability of its tenancy. The office’s leasing rate reached 100% after SCIA leased the entire Rene Square office facility for its headquarters and Seoul office. In effect, the government agency’s tenancy has removed the initial vacancy risk, the biggest concern for a newly built office.
SCIA is using the building under a five-year lease with an option to extend. Monthly rent is reportedly about 2.15 billion won, with maintenance fees at around 950 million won. A simple calculation puts annual rent alone at more than 25 billion won.
Rene Square secured SCIA as its anchor tenant even as concerns about vacancies grew amid a succession of new office supply in the CBD this year. Its location right next to a station and its large floor area are also cited as investment attractions.
Real estate IB industry sources said that while transaction prices for prime CBD offices are being set at 35 million won or more per 3.3 square meters, the price exceeding that level was seen as reflecting the role of a government agency’s stable tenancy in supporting the price.
Rene Square had previously put itself up for sale once, but the deal fell through because the parties could not agree on the price.
Properties are currently piling up for sale 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 downtown offices with public-sector tenants is assessed,” adding, “As government agency tenants, newly built prime offices, and locations right next to stations come together, more prospective buyers are considering investments.”
[email protected] Kang Gu-gwi Reporter