GIC to open 2nd tender for Seoul landmark building sale as bids disappoint

Singapore’s GIC Private Ltd., the world’s sixth-largest sovereign wealth fund, is set to seek more proposals from bidders to sell a landmark building in Seoul as bids fell short of earlier estimates.

GIC and CBRE Group Inc., the manager of the sale of Seoul Finance Center (SFC), plan to hold another tender on Wednesday for existing bidders such as BentallGreenOak (BGO), South Korean asset managers Koramco REITs Management and Trust Co. and its subsidiary Koramco Asset Management Co., according to investment banking industry sources.

The seller asked those real estate investment firms to propose new bids and detailed financing plans, according to the sources on Tuesday.

The move came as the highest bid for SFC was known to be around 1.2 trillion won ($837.8 million) at the first bidding round on Dec. 2, less than the earlier estimates of up to 1.5 trillion won, the sources said.

Koramco was understood to have placed higher bids than its competitors, but its equity financing plan was in doubt, the sources added. The seller asked the Seoul-based real estate investment firm to provide detailed plans to close the deal.

BGO’s bid was lower than Koramco’s, according to the sources.

TOUGH SALE

GIC is unlikely to be satisfied with the second tender as bidders may face difficulties in raising funds amid South Korea's deepening political turmoil following the declaration of martial law on Dec. 3.

The sale of the commercial building in Seoul’s central business district may collapse if the new tender prolongs the sovereign fund’s decision-making, sources said.

Brookfield Asset Management Ltd. failed to sell the International Finance Center building in Seoul in 2022 after an unprecedented three rounds of tenders. The Canadian asset manager might have been able to sell the complex in Yeouido, South Korea’s main financial district, had the bidding not dragged on, investment banking industry sources in Seoul said.

SFC may need additional investments of some 100 billion won to add value as the construction of the 30-story building was completed in 2001.

GIC, with about $770 billion in assets under management, has been considering selling SFC, which it bought for 350 billion won in 2000 after the 1997-98 Asian financial crisis.

The sovereign wealth fund has been a magnate in the South Korean real estate market for more than 20 years, owning other landmark offices such as the Gangnam Finance Center.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com
 
Jongwoo Cheon edited this article.