Brookfield seeks to sell IFC Seoul amid high occupancy Three office buildings almost fully leased, but Conrad Seoul Hotel's profitability weakens
이 기사는 2021년 11월 12일 08:06 더벨 유료페이지에 표출된 기사입니다.Market insiders are paying attention to whether Brookfield Asset Management will successfully sell International Finance Centre Seoul (IFC Seoul), a landmark at the center of Seoul’s financial hub Yeouido.
The IFC Seoul comprises IFC Mall, Conrad Seoul Hotel and three office buildings. According to industry sources, the vacancy rate of the three office buildings is about 1%, which is less than a natural vacancy rate of 5%. “There is less than 3,305 square meters of vacant space out of total 330,578 square meters available for rent in the three office buildings,” said an industry expert. “It can be said there is no vacancy in the buildings.”
The IFC Seoul was erected by the Seoul Metropolitan Government together with multinational insurance firm AIG in a bid to create a financial hub in Seoul. AIG at first struggled to fill the complex and ultimately sold the entire property to Brookfield in 2016. When the Canadian investment firm acquired the complex, One and Two IFC towers were almost fully occupied, but the Three IFC’s vacancy rate was as high as 75%.
Brookfield has actively sought tenants by providing lease incentives including a rent-free period. Foreign and domestic financial institutions moved into the building to help the complex to be almost fully leased. The property has transformed into a core asset which enables the owner to generate stable revenue.
According to the prime office building rental industry sources, Brookfield has decided to focus on improving its occupancy rate ahead of the sale so that the complex can be sold at a higher price.
“The previous owner offered about five months of a rent-free period,” said an industry source. “The duration has been reduced to two months now and it can be further reduced,” adding, “There is also a possibility that the owner may seek a better tenant to replace an existing tenant who has had difficulties in leasing the space.”
Some market experts said the complex may be sold in parts given that the entire complex is valued at more than 3 trillion won ($2.53 billion). The Conrad Seoul Hotel is considered the biggest hurdle in the sale process as its profitability is said to have sharply deteriorated after the outbreak of the Covid-19 pandemic.
Some also pointed out that Brookfield will be able to maximize its profits through its exit only when it sells the complex as a whole. (Reporting by Gyoung-tae Kim)
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