W550b Young City prime office deal closes

A consortium composed of D&D Investment and NH Investment & Securities has completed its acquisition of Young City office complex from UK-based investment house Actis for 550 billion won ($447.2 million), the deal manager Cushman & Wakefield Korea said Thursday.

D&D Investment, an affiliate of SK conglomerate’s real estate development arm SK D&D, seeks to establish a real estate investment trust called Young City REITs by securitizing the properties.

The deal allowed Actis to take 280 billion won return before taxes from sale of the office complex.

According to Cushman & Wakefield Korea, Young City has strived to ensure stable cash flow from tenants by increasing its weighted average lease expiry -- a barometer used to gauge a real estate asset’s risk of going vacant -- to over five years.

“Young City’s key to growth was a long-term vision of the property developer and aggressive property lease management strategy,” YK Son, head of capital markets group at Cushman & Wakefield Korea, said in a statement. “We also selected a bidder group with a minimum funding risk instead of one with the highest bidding price, so that buyers and sellers could be in a win-win situation amid the pandemic.”

Young City is a commercial complex located in the Mullae neighborhood in Yeongdeungpo-gu, west of the Yeouido business district in Seoul. The asset has been up for sale through an open bidding, where D&D Investment-led investor group was selected as the preferred bidder in February.

The complex comprises two buildings that are 13 stories high with five underground levels. Their floor space is 99,140 square meters. Citibank Korea and SK Telecom are key tenants.

By Son Ji-hyoung (consnow@heraldcorp.com)