May 02, 2024
Economy
NPS buys W26b commercial building in Seoul
[THE INVESTOR] The National Pension Service has purchased a building currently occupied by Wolfgang’s Steakhouse in Cheongdam-dong, southern Seoul, for 25.9 billion won (US$21.68 million), according to Maeil Business News on Jan. 11.
Capstone Asset Management managed the deal which was wrapped up in late December.
The five-story building’s return rate, which includes rent and management fees, is estimated to be around 5 percent -- higher than nearby commercial buildings in the posh district where the rate fluctuates between 2 to 3 percent.
Prior to this purchase, the state-run pension fund had acquired two retail buildings in Changcheon-dong and Chonggye-dong for 74 billion won and 47 billion won, respectively.
“It is unusual for a large scale fund like the NPS to invest in buildings worth 20 billion won, that were previously dominated by private transactions. It can be assumed that the increasing involvement of cash-rich players will enable the real estate asset management business to flourish as it provides a structure where several small-sized buildings can be bundled and sold to larger funds,” an industry source was quoted as saying by the business daily.
The report said this move by the pension fund can be interpreted as a strategy to pivot away from investments in office buildings and diversify its investment portfolio, as the vacancy rate of existing office buildings have been increasing and profits have been falling.
By Alex Lee (alexlee@heraldcorp.com)
Capstone Asset Management managed the deal which was wrapped up in late December.
The five-story building’s return rate, which includes rent and management fees, is estimated to be around 5 percent -- higher than nearby commercial buildings in the posh district where the rate fluctuates between 2 to 3 percent.
Prior to this purchase, the state-run pension fund had acquired two retail buildings in Changcheon-dong and Chonggye-dong for 74 billion won and 47 billion won, respectively.
“It is unusual for a large scale fund like the NPS to invest in buildings worth 20 billion won, that were previously dominated by private transactions. It can be assumed that the increasing involvement of cash-rich players will enable the real estate asset management business to flourish as it provides a structure where several small-sized buildings can be bundled and sold to larger funds,” an industry source was quoted as saying by the business daily.
The report said this move by the pension fund can be interpreted as a strategy to pivot away from investments in office buildings and diversify its investment portfolio, as the vacancy rate of existing office buildings have been increasing and profits have been falling.
By Alex Lee (alexlee@heraldcorp.com)
