LaSalle Korea awarded office site in a non-performing loan auction in Seoul

Seoul (July 30, 2024) — LaSalle Investment Management Co., Ltd. (“LaSalle Korea”), on behalf of LaSalle Asia Opportunity Fund VI (“the Fund”) and a local co-investor, was awarded an office site in Seoul after submitting the winning bid in the 5th round of a non-performing loan (NPL) collateral auction. The winning bid price of approximately US$115 million represented a 33% discount to its appraised value. The land site is walking distance from Gangnam Station within the Gangnam Business District, with existing zoning to allow development of a new office with planned GFA of over 29,000 square meters. The project cost upon completion is estimated to be approximately US$245 million.

This acquisition marks the Fund’s second foray into the office market in Korea following a high-yield loan deal last year to bridge finance a 10-storey office project in Seoul’s Seongsu district. This collateralized loan was priced during a period of credit spread dislocation and was successfully repaid on its maturity date in December 2023, allowing the Fund to exit its first opportunistic debt investment in Asia Pacific.

Amongst key gateway city office markets globally, Seoul’s Gangnam office district continues to display post-pandemic resilience supported by both occupier demand and capital markets liquidity. According to JLL REIS and JLL Korea Research, as of Q1 2024, the office vacancy rate in Gangnam was 0.3%, the lowest compared to the two other business districts in Seoul with net effective rents also registering the highest year on year increase compared to the other business districts.

Steve Hyung Kim, Senior Managing Director and Head of Korea, commented: “Opportunistic investing in a higher cost of capital environment has forced us to be patient and also creative in how we source attractive entry points to our acquisitions. On behalf of our investors, we recently closed on recapitalizations, private off-market sales, and collateral acquisitions from NPL auctions like this recent transaction which capitalizes on both Gangnam’s strong office fundamentals, as well as a lowered project cost basis due to a legacy borrower and junior lender getting foreclosed. Larger sized office sites in Gangnam have retained scarcity value and this latest project from LaSalle Korea will introduce modern designs and sustainability initiatives to which we are very excited about.”

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