CPPIB invests in Seoul office building for rental housing conversion

The Canada Pension Plan Investment Board (CPPIB) and South Korean property developer MGRV have jointly acquired the headquarters of a domestic women’s clothing company, marking the pension fund's entry into the Korean rental housing market.

A joint venture between CPPIB and MGRV recently purchased the building and land parcel in central Seoul from Semi Apparel Co. for 35.5 billion won ($24 million), according to investment banking sources on Tuesday.

London-based Pacific Asset Management participated in the deal, handled by Samjong KPMG.

They will renovate the building measuring 19,800 square meters into rental housing. MGRV had already received approval for its renovation.

CPPIB and MGRV set up the JV early this year with an equity capital of 500 billion won as the latter was looking for a financial partner for the purchase of the Semi Apparel headquarters. CPPIB, or CPP Investments, controls 95% of the venture.

MGRV had expressed interest in the property as Semi Apparel was looking to unload the property to streamline its operations hit by a slowdown in the offline clothing market.

CPPIB and MGRV are understood to be pursuing other property deals to develop rental housing in Seoul and surrounding areas.

The Korean developer operates co-living rental housing company Mangrove across the country. The residential facilities are similar to student accommodation, where tenants share kitchens and some communal space.

Global asset managers have been jumping into South Korea’s rental housing market since the government cleared the way for industrialized house sharing in the second half of 2023.

Seoul has eased regulations on the new type of rental housing, including a relaxation on parking space requirements, targeting the growing population of single and two-person households.

Morgan Stanley is teaming up with Seoul-based Gravity Asset Management to invest in South Korea’s rental housing market. They have purchased studio-type apartments in Seoul.

The studios are being renovated into rental residences, jointly with property developer SK D&D Co. and co-living space operator HOMES Company.

London-based private equity firm Intermediate Capital Group (ICG) formed a 300-billion-won fund in 2023 to buy and renovate accommodations in the Seoul Metropolitan Area into rental housing.

Write to Da-Eun Choi at max@hankyung.com
 

Yeonhee Kim edited this article.