Young City, located in Mullae-dong, Yeongdeungpo-gu, Seoul and owned by Actis LLP, a British Private Equity Investment Firm, has been successfully sold to a consortium of D&D investment (SK D&D) / NH Investment & Securities at KRW 550 billion. The building achieved a unit price over KRW 18 million per pyeong, which is above the market's initial estimate of 17 million KRW per pyeong. Actis is expected to reap profits of KRW 280 billion (before tax) from the sales.
Young City is the first prime office in Mullae-dong, which is located between Yeongdeungpo Station on Line 1 and Mullae Station on Line 2 of the Seoul Metro. The office, composed of two buildings as twin towers (B5~13F) with a total GFA of 99,140㎡, was developed by the Fountain Valley Project Finance Company (PFV), who purchased the land for KRW 64 billion back in 2015.
After appointing Cushman & Wakefield Korea as sales agent in last September, Young City modified its disposal strategy to sell the asset upon its stabilization. In fact, Young City successfully attracted key tenants such as Citibank Korea and SK Telecom, achieving occupancy rate reaching up to 97% by the beginning of this year.
As the vacancy issue was resolved, investors’ interest in Young City largely increased. In addition, the aggressive marketing that highlighted the recent development plans near Young City has raised competition between investors which resulted in higher price successfully receiving biddings from 18 potential investors despite COVID-19 outbreak.
Cushman & Wakefield's Investment Advisory Team, who acted as sole agent on behalf of the seller, has successfully carried out the MOU, Due Diligence, and SPA settlement by providing thorough advisory amid the deepening COVID-19 crisis, closing the deal and delivering KRW 280 billion (before tax) of selling profits to the client.
"The success factor of Young City was that it has stabilized the WALE (Weighted Average Lease Expiry) to more than 5 years based on solid long-term investment vision and aggressive rental management of the Developer, and thereby exceeding the concerns on supply issue expected in YBD. I also believe we successfully satisfied both the seller and the buyer by not only strongly addressing the future development potentials nearby Young City during the marketing process, but also by helping them reach negotiation with 1% or so adjustment of the initial offering price. Last but not least, selecting the bidder who proposed stable financing structure that could minimize the funding and closing risk in this unstable market environment due to COVID-19, rather than simply choosing the bidder with the highest price surely attributed to the successful closing of the deal,” says YK Son, the Senior Executive Director of the Investment Advisory Team at Cushman & Wakefield.
D&D investment, AMC who purchased the office, is already raising high expectations in the market as it plans to make Young City go public in REITs market with NH Investment & Securities.