Samsung building sale could set a new record

Competition to buy the Samsung C&T building in Seocho-dong, southern Seoul, is heating up, with market experts projecting the sale will break the record for the most expensive office building in Korea.

The sale of the C&T building marks the first time that Samsung has put one of its Seocho offices on the market.

According to sources in the real estate and investment bank industry on Sunday, around 10 institutional investors including private equity fund Blackstone, Egis Asset Management, Koramco REITs Management and Trust, NH Investment & Securities, KB Securities and Shinhan REITs Management have submitted bids for the Seocho office building on Thursday.

Singapore’s Temasek-backed Mapletree is also said to have made a bid.

There is speculation that the participation of foreign investors such as Temasek and Blackstone will drive up the bidding price.

The C&T building is one of three buildings that Samsung Group owns in Seocho-dong. The development was completed in 2007.

Currently the other two building are occupied by Samsung Life Insurance and Samsung Electronics.

The C&T building is 32 stories high and has seven basement floors.

The book value of the land that the building is on is valued at 384.5 billion won ($358 million), according to an information memorandum distributed to investors by Savills Korea, which is handling the sale. The book value of the building itself is at 170.3 billion won. The combined value suggests the building is worth 554.8 billion won, which translates to 22.5 million won per 3.3 square meters (35.5 square feet).

The market estimates the building will go for around 700 billion won, or about 30 million won per 3.3 square-meters. If so, this would be a new record for Korea. The previous record sale is held by Gangnam N Tower, where 3.3 square-meters is valued at 29 million won.

KB Real Estate Trust was appointed as the primary negotiator for the building in April.

The building is an attractive investment as not only is it located in one of the most affluent neighborhoods in Seoul, close to the Gangnam subway station, but the new owner will also not have to look for tenants. Samsung Fire & Marine Insurance will remain in the building until 2021.

The deposit is 25.4 billion won and the monthly rent is 2.6 billion won.

Although Samsung C&T has said it is selling the building in an effort to improve its management efficiency, industry experts speculate that the move is part of Samsung Group’s ongoing corporate governance reform.

BY KIM TAE-YOON [lee.hojeong@joongang.co.kr]