Blackstone sells prime Seoul office building for $586 mn to Koramco

Blackstone Inc. completed selling off Arc Place, a prime office building located in Seoul's upscale Gangnam area, to Koramco REITs Management and Trust Co. for 791.7 billion won ($586.4 million) six months after the local real estate manager was named the preferred bidder, the deal manager Jones Lang LaSalle (JLL) said on Monday.

This is the largest office transaction in South Korea since last October when KB Asset Management Co. acquired Samsung SDS Co.'s headquarters in the capital's Jamsil area for 850 billion won.

Blackstone purchased Arc Place for around 470 billion won in 2016. To clinch the deal, the US alternative investment firm offered a discount on its initial sale price, according to market insiders.

Koramco has struggled with fundraising to acquire the property. It initially planned to invest around 370 billion won in equity, comprised of 200 billion won in common shares and 170 billion won in preferred shares.

The real estate manager bought the common shares via its blind pool fund, which raised funds from The Korean Teachers’ Credit Union (KTCU) and other local institutions.

But the deal was delayed as Koramco faced challenges in fundraising for preferred shares. Blackstone accepted Koramco’s proposal to cut around 30 billion won from the original sale price, signing the final deal at 190 billion won in common shares and 137 billion won in preferred shares.

The landmark has a 62,747-square-meter floor area with 24 stories above ground and six underground. It is fully leased out for affiliates of global corporates including Warner Bros. Entertainment Inc., Dyson Ltd. and eBay Inc. and local firms such as Lotte Capital Co. and fintech app Toss operator Viva Republica Inc.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com

Jihyun Kim edited this article.