This article was displayed on the ChosunBiz MoneyMove site on April 9, 2025, at 3:22 p.m.
KT&G has officially initiated the sales process for the Euljiro Tower, located in the central business district of Jung-gu, Seoul. KT&G is reorganizing its real estate portfolio for business restructuring.
According to investment banking (IB) industry sources on the 9th, Samjeong KPMG, the advisory firm for the sale of Seoul's Euljiro Tower held by KT&G, has officially begun bidding for potential buyers. The sellers plan to select a preferred negotiator within April and finalize the deal.
The Euljiro Tower, located at 106-9 Chodong, Jung-gu, Seoul, is an asset acquired by KT&G in 2014 for approximately 61.2 billion won from Golden Bridge Partners. It is recognized as a prime office building with a total floor area of 18,188.7 square meters, comprising 4 basement levels and 14 floors above ground. Following marketing efforts targeting potential buyers, the sellers reported that dozens received the investment memorandum (IM), indicating fierce competition.
Recently, large office properties in the city center area of Jongno and Gwanghwamun have been falling through due to a gap in expectations between sellers and buyers. Previously, the Singaporean Sovereign Wealth Fund (GIC) conducted two bidding rounds for the Seoul Finance Center (SFC), considered a symbolic asset in Jung-gu, Seoul, before ultimately canceling the sale. The Euljiro City Center Tower recently canceled its bidding as well, and the Pacific Tower in Seosomun-dong is reported to have shelved the sale and extended the fund's maturity.
However, interest from investors is focused on the mid-sized Euljiro Tower. There is high demand from companies looking for new office buildings, and compared to large offices over 1 trillion won, financing is relatively easier. The sellers of the Euljiro Tower have proposed a selling price of 27 million won per 3.3 square meters, which suggests a transaction value of around 150 billion won.
An industry source noted, "Unlike the Gangnam area, the attractiveness of properties in the city center is decreasing due to the scheduled supply of new office buildings," adding that, "Especially as market funds are drying up, mid-sized offices with stable tenants are preferred over large offices."
Currently, the Euljiro Tower is leased by CJ Foodville, Johnson Controls International Korea, KGEL, CD Networks, and BGF Retail. With stable tenants already secured, it is said to be able to generate cash flow reliably, attracting interest from not just strategic investors (SI) but also asset management companies operating real estate funds and REITs. The sellers are keeping some areas on the 13th floor and 14th floor vacant based on tenants' demand.
KT&G has been actively expanding its real estate development business since the mid-2010s, using funds generated from its tobacco business. The company has invested in various projects, including the Knowledge Industry Center in Gwacheon and the Cheongna Medical Complex Town in Incheon, as well as holding a 50% equity stake in the Starfield Suwon shopping mall with Shinsegae. Previously, the Bundang Tower was sold to Pebblestone Asset Management.