Keppel Corp to acquire Seoul office building for $229 million

SINGAPORE - Keppel Corp is acquiring a freehold 15-storey office tower in Seoul for a purchase price of 220 billion won (S$229 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 sq m.

It will be acquired through subsidiaries of Keppel’s land unit, Keppel Land, as well as asset manager Keppel Capital, through a joint venture company that is 55.93 per cent owned by Keppel Land and 44.07 per cent owned by Keppel Capital.

According to Keppel Corp on Monday, 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 shareholder loans of some US$113.2 million (S$153 million) to the joint venture company. Keppel’s subsidiaries will undertake an additional funding commitment of up to US$4.84 million, in proportion to their shareholding interests.

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.

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

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

“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 closed at $7.31, down 0.27 per cent, on Monday.

THE BUSINESS TIMES