Angelo, Gordon seeks to redevelop Korean bank building as luxury hotel

A consortium led by US investment firm Angelo, Gordon & Co. has been selected as a preferred buyer of a local bank’s building in Seoul, for which the New York-based company placed the highest bid among four bidding groups to rebuild the property as a luxury hotel.

Angelo, Gordon, which has been seeking opportunistic property investments in South Korea for over 20% returns, teamed up with Mastern Investment Management, a domestic asset manager, to bid for the 17-story building of Kookmin Bank.

Savills Korea, which managed the sale, picked the Angelo, Gordon-led consortium as the preferred bidder on August 4, in a deal worth over 240 billion won ($210 million), according to real estate investment sources.

The three other bidding groups include Morgan Stanley, Standard Chartered Private Equity and Singapore’s real estate investor Ascott, respectively.

Angelo is considering rebuilding the property as a five-star hotel to be equivalent to nearby Lotte Hotel and Westin Chosun Hotel.

The Angelo, Gordon-led consortium is known to have placed the highest bid of 310 million won per 3.3 square meters of land area, or more than 240 billion won in total, among the four bidding groups.

The bid price is higher than the 263 million won per 3.3 square meters offered by a South Korean builder in June to buy an office building of the formerly Korea Exchange Bank, which is just five-minute walking distance from the Kookmin Bank building.

“Angelo, Gordon has invested primarily in real estate projects with the highest degree of difficulty in this country, including the redevelopment of Ellui Hotel in Gangnam,” a real estate industry source told the Korean Investors.

Gangnam refers to the wealthy areas in the south of Han River that runs through Seoul from west to east.

The building consists of an office building, a nine-story annex and a parking tower. It is close to two subway stations.

The selling side had asked 30 million won per 3.3 square meters of floor area from the beginning of the auction, according to the sources. It has floor space of 25,715 square meters.

Angelo, Gordon will inject capital into a fund set up for the acquisition which the South Korean asset management company will manage.

The $28 billion alternative investment firm is also in the bidding for Doosan Group’s commercial building under construction near Seoul.

By Daehun Kim and Hyun Il Lee

daepun@hankyung.com