Blackstone to buy stake in Korea’s largest shopping mall

The Blackstone Group has agreed to buy a 31.85% stake in South Korea’s largest shopping mall from the US developer Taubman Centers Inc. which is selling a large chunk of its holding in Starfield Hanam, along with stakes in two retail assets in China.

The stake purchase will be made in a $480 million package deal, under which Taubman will offer 50% of its interests in the three shopping centers in Asia to the US investment group, according to Taubman’s announcement on Feb. 14.

Blackstone will be investing in the three retail assets, including CityOn.Xi'an and CityOn.Zhengzhou, through its recently-launched Asia core plus real estate investment unit. It targets stabilized office, logistics, residential and retail assets in high quality Asian geographies and gateway cities.

After the transaction, Blackstone will become No. 2 shareholder in Starfield Hanam, a 460,000-square-meter complex in the Seoul metropolitan area. South Korea’s retail giant Shinsegae Corp. will remain the top shareholder with a 51% stake.

Starfield Hanam, opened in 2016, is a 51:49 joint venture between Shinsegae and Taubman.

Shinsegae had attracted the Michigan-based developer for the $1 billion project to build the western-style shopping mall east of Seoul.

It was Taubman’s first ground-up development in South Korea and the biggest investment for Shinsegae by a foreign investor.

With a retail space of 156,000 square meters, Starfield Hanam is occupied with about 300 stores and restaurants, ranging from international luxury brands to car showrooms to a water park.

Its 2018 sales were estimated at 960 billion won, up sharply from 103.9 billion won a year before.

In September 2016, Taubman CEO Robert Taubman told a news conference that he expected Starfield Hanam to generate returns of 7.5~8%.

It will retain 17.15% in the South Korean shopping center.

Taubman plans to recycle the net cash proceeds from the sale of stakes in the three Asian retail assets, estimated at about $315 million, for other investment. It has invested in 30-odd shopping malls in north and central Americas and Asia.

The city of Hanam, where Starfield Hanam is located, has seen strong population growth in the past few years, helped by new housing development.

Costco will open its 16th store in South Korea in the city, near Starfield Hanam, within the year.

By Daehun Kim

daepun@hankyung.com