M&G Real Estate to buy $1 bn Seoul building as KKR backs down

M&G Real Estate of London-based Prudential Plc. will sign an agreement soon to buy new twin office towers in Seoul for around 1.1 trillion won ($1 billion), after KKR & Co. failed to reach a final deal for what is set to be the most expensive property in South Korea.

In the auction for Centropolis Towers set to be completed next month, a KKR-led consortium had been selected as a preferred buyer, beating a M&G Real Estate-led group and other bidders.

But CTCore, the owner and developer of the connected 26-story buildings, recently terminated one-month talks with KKR. Instead, it chose the M&G-led group which approached the seller again after the negotiations with KKR fell through, according to sources with knowledge of the matter on May 3.

M&G had bid higher and scored better than KKR in terms of financing capabilities and given the fact that it has a longer time horizon for investment than the US private equity giant.

M&G’s Europe real estate fund and Asia fund will participate to finance the Seoul property deal which is expected to close next month.

Centropolis Towers, 113.8m tall, seems to be the only new commercial building of that size in the district over the next few years because of the height limits of 90m within the central business district in northern Seoul.

M&G teamed up with South Korea’s LB Asset Management Co. Ltd. which will execute the transaction on behalf of the UK investment firm.

The upcoming deal valued the 134,310 square-meter property up for sale at 1.1 trillion won, or around 27 million won per 3.3 square meters.

Its per-unit selling price is below the 28.1 million won paid for K-Twin Tower in Seoul which KKR sold last December, together with other investors.

But it will mark the biggest single property transaction in South Korea, since Morgan Stanley Private Equity bought the ex-headquarters building of now-defunct Daewoo Group for 960 billion won in 2007.

M&G has invested in retail stores, logistics centers and outlets in South Korea.

Last year, M&G placed a bid for a new office building in South Korea, wholly owned by the Public Officials Benefit Association, but lost to Mirae Asset Global Investments Co. Ltd. in the 460 billion won deal.

By Daehun Kim

daepun@hankyung.com