SEOUL (June 7, 2023) — LaSalle Investment Management (“LaSalle”), on behalf of its Korea logistics investment joint venture with a Middle Eastern sovereign wealth fund, announced today the acquisition of two logistics facilities in Bubal District, Icheon, South Korea. The two warehouses, built between 2021 and 2022, have a combined gross floor area (GFA) of 16,346 pyung. They have an existing occupancy rate of approximately 65% and are anchor tenanted by one of the largest third-party logistics (3PL) companies in South Korea under a long-term lease.
The warehouses are strategically located in the Icheon sub-market within Greater Seoul to offer occupiers with access and connectivity to South Korea’s dense and online connected consumers. An established industrial sub-market in South Korea, the southeast area where Icheon is located has the largest Grade-A logistics stock in Greater Seoul.
This transaction follows an opportunistic high-yield loan that LaSalle, on behalf of the LaSalle Asia Opportunity Fund VI (LAO VI) closed earlier this year. The collateralized loan financed the acquisition of a land site valued at KRW116.0 billion which obtained entitlements to develop a 10-storey office building with GFA of 6,480 pyung in the Seongsu district of Seoul. The project is expected to break-ground this year. The borrower has an established track-record of developing, leasing, and selling similar investments and this will be their 4th office project specifically in the Seongsu district.
The Seoul office market has demonstrated relative strong fundamentals to date as a departure from prevailing trends in other metropolitan cities globally which are pivoting towards some form of work-from-home. According to JLL Korea, the average office vacancy rate across Seoul was 1.1% as of Q1 2023.
Steve Hyung Kim, Senior Managing Director and Head of Korea for LaSalle, commented: “We are finding attractive risk-adjusted entry points into deals whether investing through equity or through debt, while still targeting the property sectors and locations we maintain conviction on. Widened credit spreads have allowed us to execute high-yield secured debt financings on behalf of our opportunistic strategy; and in the logistics sector near to mid-term with the new supply headwinds, we will also selectively invest in recapitalization situations as the market de-levers from vintage loans maturing against unstabilized projects.”
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