Keppel Corp to acquire Seoul office building for 220b won

KEPPEL Corporation is acquiring a freehold 15-storey office tower in Seoul, South Korea, for a purchase price of 220 billion won (S$228.7 million) from Hana Alternative Assets Management, a fund of Hana Financial Group.

This is below the independent valuation of the property, named Samhwan Building, of 228.9 billion won as at Oct 31.

Including the purchase price, the aggregate consideration for the acquisition stands at 223.2 billion won.

Located in the Jongno central business district in Seoul, Samhwan Building has a total gross floor area of 31,403 square metres.

It will be acquired through a subsidiary of the group’s land unit Keppel Land, as well as private funds managed by its asset manager Keppel Capital, through a joint venture (JV) company that is 55.93 per cent owned by Keppel Land, and 44.07 per cent owned by private funds managed by Keppel Capital. (*see amendment note)

According to Keppel Corp on Monday (Dec 19), the acquisition is expected to be completed by the end of the year.

Upon completion of the transaction, Keppel Land will hold a 39.5 per cent effective interest in Samhwan Building, with the remainder held by private funds of Keppel Capital.

The group does not expect its acquisition to have a material impact on its earnings per share and net tangible assets per share for the current financial year.

As part of the deal, Keppel Land and Keppel Asia Macro Trends Fund IV (KAMTF IV) will extend shareholders’ loans of some US$113.2 million to the JV company. Keppel Land and KAMTF IV will undertake an additional funding commitment of up to US$4.84 million, in proportion to their shareholding interests. (*see amendment note)

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KAMTF IV is a fund managed by Alpha Investment Partners, which is in turn managed by Keppel Capital.

After the acquisition is completed and relevant regulatory permits approved, Keppel will embark on asset enhancement initiative works to expand the property’s leasable office space, along with the refurbishment of existing spaces to enhance the property’s value.

The group is also considering the addition of sustainable features such as high-performance building facades, energy-efficient cooling and heating systems, smart lighting systems, indoor environmental quality monitoring, and intelligent building controls.

Louis Lim, chief executive of Keppel Land, said the refurbishment works will enable Samhwan Building to be a “showpiece in South Korea of Keppel Land’s sustainable urban renewal capabilities”.

“As the business and financial hub of South Korea, Seoul has seen a rising demand for quality office spaces in the city,” added Keppel Capital chief executive Christina Tan.

“We are pleased to collaborate with Keppel Land on the acquisition of Samhwan Building, a uniquely located prime asset in the heart of the central business district, which is well-poised to capture this growing demand.”

Shares of Keppel Corp traded at S$7.38, up 0.7 per cent or S$0.05, as at 9.23 am on Monday.

*Amendment note: Clarification has been made that previous mentions of Keppel Capital’s subsidiaries in an earlier version of this story are in fact, funds managed by subsidiaries of Keppel Capital.