[Edaily Marketin KIM SUNG-SOO Reporter] “Pangyo Techno Valley H-Square,” a prime office building in Pangyo backed by investors including the Military Mutual Aid Association and Korea Land Trust, has successfully secured 538 billion won in refinancing.

Not only was the loan maturity extended by two years, but the interest rate was also lowered, and the financial burden was reduced by converting the existing mixed senior- and mezzanine-level structure into a fully senior loan.

Interest Rate Lowered from 4.9% to 4.22%… Full Conversion to Senior Loan

According to investment banking (IB) industry sources on the 2nd, K-One No. 15 Pangyo Trust-Managed Real Estate Investment Corporation (K-One No. 15), which owns Pangyo H-Square, recently succeeded in refinancing a total of 538 billion won in long-term loans.

By finalizing the refinancing ahead of the original loan’s maturity date on the 1st, the loan term was extended by two years until July 1, 2028.

Pangyo H-Square is a premier office asset located in Pangyo Techno Valley, Seongnam, Gyeonggi Province. Completed in 2011, the building spans four basement levels and ten above-ground floors, with a total floor area of 85,140 square meters (approximately 25,755 pyeong). It is adjacent to Pangyo Station on the Shinbundang Line, and with Kakao affiliates serving as major tenants, it generates stable rental income.

Through this refinancing, K1 No. 15 has also alleviated the pressure to sell the asset prematurely. As the asset is managed through a REIT (Real Estate Investment Trust) and has approximately five years remaining until its management term expires in June 2031, the fund can now manage the asset stably while monitoring market conditions.

The most significant achievement of this refinancing is the improvement in financial terms. The interest rate on the existing senior loan was approximately 4.9% on an all-in-cost basis, but this refinancing has reduced it to 4.22%. This is interpreted as a result of recent interest rate stability combined with financial institutions’ preference for high-quality office assets.

The loan structure has also been simplified. Previously, the total debt consisted of 486 billion won in senior loans and 52 billion won in mezzanine loans, for a total of 538 billion won; however, it has now been restructured entirely as senior loans. Analysts attribute the lenders’ strong interest to the property’s status as a “core” office building with an excellent location and stable tenant base.

Securing a 'Stable Operational Foundation' Through the REIT’s Maturity in 2031

The largest shareholder of K-One No. 15, which holds the assets, is M-Plus Asset Management.

Shares of K-One No. 15 are divided into “Class 1 Preferred Stock” and “Common Stock.” Preferred stock is entitled to priority dividends (including the cumulative amount of any undistributed dividends, if any) from distributable earnings up to the fiscal year immediately preceding the fiscal year in which the real estate holdings are sold.

Any remaining distributable profits are distributed to common stockholders. The largest holder of Class 1 Preferred Stock (21.6% stake) is Standard Chartered Bank Korea (hereinafter “SC Bank”). Since SC Bank is the trustee for M-Plus General Private Real Estate Master Investment Trust No. 27-1, M-Plus Asset Management effectively holds the largest portion of the preferred stock.

M-Plus Asset Management was originally a management company wholly owned by the Military Mutual Aid Association. However, when the Military Mutual Aid Association sold its stake last April, Apex Asset Management became the largest shareholder. Apex Asset Management holds a 50% + 1 share stake, while the Military Mutual Aid Association holds a 50% - 1 share stake.

The market views this refinancing as evidence that sentiment in the financial markets is improving, particularly regarding prime office properties. Analysts note that as uncertainty in the Middle East has decreased following the U.S.-Iran ceasefire agreement, funds from major lenders are once again flowing into core office properties with high-quality tenants, leading to a rapid improvement in loan terms.

An industry insider stated, “Pangyo H-Square is a prime example of a core office asset with low vacancy risk and excellent rental stability,” adding, “As financial institutions have recently shown a strong preference for high-quality assets, we were able to secure favorable terms, including a lower interest rate and full senior debt refinancing.”