The fund acquires a quality commercial property in Seoul for KRW 440.8 billion
SEOUL, South Korea, Aug. 29, 2024 /PRNewswire/ -- CapitaLand Investment Limited (CLI), a global real asset manager, has closed a new value-add office blind pool fund in South Korea with total equity commitment of KRW 200 billion[1] (S$194.4 million[2]). The private fund is a strategic partnership with KB Bank, an affiliate of the country's largest financial group, KB Financial Group. CLI holds a sponsor stake in the fund in alignment with the interests of its capital partner. The new fund increases CLI's geographical exposure to South Korea, a key focus market. It also increases its funds under management (FUM) in the market by 16% to S$3.3 billion.
The fund has acquired an operating freehold commercial property, Golden Tower, from an unrelated third party for KRW 440.8 billion (S$428.5 million). Leveraging its commercial management expertise, CLI will also receive recurring fee income as the asset manager of Golden Tower. The 20-storey property is located in the heart of Seoul's Gangnam Business District (GBD). Golden Tower is within walking distance to three subway stations - Seolleung, Samseong, and Samseong Central stations - and offers tenants premium views of Seonjeongneung Park, a popular cultural landmark. In addition to offices, the property also has ancillary retail as well as food and beverage options.
Golden Tower is set to undergo an asset enhancement initiative (AEI) comprising improvements to areas such as the lobby, facade as well as mechanical, electrical and plumbing components to improve the asset's energy efficiency. Post-AEI, the property is expected to achieve a Leadership in Energy and Environmental Design (LEED) Platinum certification. The AEI is slated to start at the end of 2024 and be completed by 3Q 2025.
Mr Min Il Sung, CLI's Head for Korea Capital Markets, said: "CLI has over 20 years of experience operating in South Korea. Leveraging our deep market knowledge, deal sourcing capabilities and investment expertise, we secured Golden Tower in an off-market deal for our new value-add office fund. Seoul's office market remains one of the most resilient in Asia with the lowest vacancy rates[3]. With our value-add strategy and Golden Tower's strategic location in the bustling GBD, the strongest performing office submarket in the country, we are confident of delivering long-term value for our partner. The fund marks the maiden collaboration between CLI and KB Bank. We look forward to strengthening the partnership with more co-investment and fund opportunities in the future."
Mr Matthew Sohn, CLI's Managing Director and Head for Korea, said: "Value-add investment strategies are gaining prominence in South Korea[4] amid prolonged high interest rates. Investors are seeking to partner organisations like CLI with a proven track record, strong asset management and operational expertise across different asset classes and fund strategies. South Korea is a focus market for CLI. We will continue to work alongside like-minded capital partners to grow our office portfolio as well as in other asset classes such as logistics, lodging and data centres. Leveraging CLI's investment and operating expertise in one of Asia's largest self-storage businesses[5], we also see strong potential to expand into the self-storage sector in South Korea. CLI continues to grow our private funds business to achieve attractive risk-adjusted returns for our partners."
CLI's presence in South Korea
With the new value-add office fund, CLI now manages eight private funds in South Korea. The fund's acquisition of Golden Tower also expands CLI's portfolio of diversified asset classes comprising offices, logistics facilities, lodging properties and data centres[6].
In September 2023, CLI's flagship regional core-plus fund, CapitaLand Open End Real Estate Fund, acquired a newly completed, Grade A logistics property in South Korea. The high specifications logistics property, Anseong Seongeun Logistics Centre, was secured at an attractive price through an off-market exercise. The property is strategically located in the north-western region of Anseong, an emerging logistics hub in the Gyeonggi province.
Through CLI's wholly owned lodging business unit, The Ascott Limited and its lodging trust, CapitaLand Ascott Trust, CLI also has nine serviced residences and hotels with more than 2,400 units in Seoul, Busan, Cheongju, Incheon and Jeju.
[1] Includes CLI's equity contribution.
[2] Based on exchange rate of KRW 1 to S$0.000972 unless otherwise stated.
[3] CBRE Research, June 2023.
[4] CBRE's 2024 Asia Pacific Investor Intentions Survey.
[5] APG and CapitaLand Investment in joint venture to build dominant self-storage platform in Asia.
[6] Completed and under development.
About CapitaLand Investment Limited (www.capitalandinvest.com)
Headquartered and listed in Singapore, CapitaLand Investment Limited (CLI) is a leading global real asset manager with a strong Asia foothold. As at 30 June 2024, CLI had S$134 billion of assets under management as well as S$100 billion of funds under management (FUM) held via six listed real estate investment trusts and business trusts and a suite of private real asset vehicles that invest in thematic and tactical strategies . Its diversified real estate asset classes include retail, office, lodging, industrial, logistics, business parks, wellness, self-storage and data centres.
CLI aims to scale its fund management, lodging management and commercial management businesses globally and maintain effective capital management. As the investment management arm of CapitaLand Group, CLI has access to the development capabilities of and pipeline investment opportunities from CapitaLand's development arm.
As a responsible company, CLI places sustainability at the core of what it does and has committed to achieve Net Zero carbon emissions for Scope 1 and 2 by 2050. CLI contributes to the environmental and social well-being of the communities where it operates, as it delivers long-term economic value to its stakeholders.
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Issued by: CapitaLand Investment Limited (Co. Regn.: 200308451M)
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CapitaLand Investment closes new KRW 200 billion value-add office fund in South Korea to grow funds under management
