Less than three months of divesting Joong Ang Building, Rodamco Asia N.V. (Ã¢â¬ËRAÃ¢â¬â¢) announced today that it has re-invested in the office property market in Seoul, South Korea. It has acquired a twin-tower office complex in the Central Business District of Seoul known as Eunsuk Building, and will re-name it Rodamco Center (Ã¢â¬ÅRCÃ¢â¬Â) for greater brand recognition of the property in the South Korean market as a Rodamco Asia investment.
The acquisition was made through the purchase of 100% of the shares of the company that owns Rodamco Center, being Chilbong Industries LLC, a South Korean entity that was set up by U.S. investment banks Morgan Stanley and Goldman Sachs for the purpose of buying Eunsuk Building in November 2000.
The net purchase price (after estimated purchase costs) of Rodamco Center is KRW 95 billion (EUR 68.8 million), of which Rodamco AsiaÃ¢â¬â¢s equity investment is approximately KRW 24 billion (EUR 17.4 million) and the balance of KRW 71 billion (EUR 51.4 million) is financed by local bank borrowings and tenant security deposits.
The initial project and equity yields are 9.1% and over 16% respectively. Rodamco AsiaÃ¢â¬â¢s net profit for the current financial year 2003/2004 is expected to benefit from this transaction by about EUR 1.9 million.
Ton de Boer, Chief Executive Officer of Rodamco Asia said, Ã¢â¬ÅWe are very pleased to re-invest in such an attractive property in the South Korean office sector so soon after we have divested Joong Ang Building in late February, and Capital Square last December. More importantly, while we sold Joong Ang Building at a yield of 7.8%, and Capital Square at around 6% yield, we are therefore now achieving a higher yield of over 9% by re-investing part of the sales proceeds in Rodamco Center. This is what makes Rodamco Asia successful Ã¢â¬" the ability to seize good opportunities to realise higher returns as they arise.Ã¢â¬Â
Rodamco Center is made up of two towers connected to each other at the four basement levels. East Tower is 12-storey high, while West Tower is 15-storey high. Together, the total gross floor area is 15,872 pyung or 52,471 square metres.
Rodamco Center has attracted high profile, stable tenants that have invested in building up their facilities and premises. This is due to the proximity of RC to the core CBD area. In addition, RCÃ¢â¬â¢s setting is unique in the Seoul CBD where there are only a few office properties with a vast area for ground level parking and where tenants enjoy a campus-like environment within the enclosed boundaries of the complex.
The building is currently 97.2% occupied, with the largest tenants being Samsung Card (Ã¢â¬ËSCÃ¢â¬â¢), a top credit card company in South Korea, which occupies 68.1% of the leasable space and Kyesung Paper (Ã¢â¬ËKPÃ¢â¬â¢), a major paper manufacturing company, which occupies 10.6% of the space. The lease contracts for both SC and KP include an annual rent escalation clause.
Mr de Boer said, Ã¢â¬ÅWe are confident this investment will be a successful one for us. It is already doing well, and by re-naming it Rodamco Center, we will further enhance its image and make it even more attractive to target tenants.Ã¢â¬Â
Source: Rodamco Asia