Keppel Capital fund buys 3 Grade A Seoul commercial properties

KEPPEL Capital's Alpha Asia Macro Trends Fund III fund (AAMTF III) is buying three Grade A commercial buildings in Seoul's business districts for 430 billion won (S$510 million) from a Korean asset management company.

Keppel Investment Management, the asset management arm of Keppel Capital in South Korea, will be appointed the local asset manager for the three buildings which are all freehold.

Yeouido Finance Tower is a 21-storey mixed-use development located in Korea's "Wall Street" equivalent Yeouido business district, with 39,100 sq m of office space and approximately 3,200 sq m of retail space. Tenants mainly comprise the insurance, financial and information technology sectors and include Samsung Life Insurance and Tong Yang Asset Management.

Completed in 1994, it is a minute's walk from Yeouido station and Yeouido bus transfer centre. Keppel Capital said that a new rail line GTX B, expected to be completed by 2025, will improve the property's accessibility to Songdo international business district and major stations in the CBD.

Nonhyun Building is a 20-storey office and retail mixed-use development in Gangnam business district offering about 16,700 sq m of office space and approximately 1,900 sq m of retail space. It is next to Nonhyun station. Its tenants mainly comprise the insurance and manufacturing sectors. Some examples include Hanwha Life Insurance and Fissler Korea.

The 15-storey Naeja Building in Gwanghwamun CBD spans 13,000 sq m in gross floor area and is currently leased to local tenants. Global top-tier law firm, Kim & Chang, is its anchor tenant. Completed in 2000, the building is within a three-minute and 10-minute walk from Gyeongbokgung Palace station and Gwanghwamun station respectively.

Alvin Mah, chief executive of Alpha Investment Partners which manages AAMTF III, said: "The acquisition of the portfolio is in line with AAMTF III's strategy of creating value and driving returns for our investors. These prime commercial properties are well-located in major business districts of Seoul and have good connectivity and high accessibility to public transportation. Their addition to AAMTF III also aids in the diversification of the fund's portfolio."

Robert Sung, chief executive of Keppel Investment Management, said that thanks to both foreign and domestic investors, real estate investments have been strong in Seoul, and the office sector is expected to see limited supply over the next few years while leasing demand is projected to remain steady.

He added: "We are confident that these favourable fundamentals, coupled with our experienced team, active asset management on the ground and robust value-creation strategies, will enable us to generate good returns for AAMTF III's investors. We will continue to build on this traction and actively pursue quality opportunities to strengthen our product offerings in South Korea."

The acquisition of the three buildings is expected to be completed in the second quarter of 2019.

Keppel Corporation shares closed at S$6.79 on Monday, down S$0.16 or 2.3 per cent, before the announcement was made.