[Edaily Marketin KIM SUNG-SOO Reporter] Two REITs (Real Estate Investment Trusts) took differing approaches regarding the “A-One Tower Dangsan,” an office building in Yeongdeungpo-gu, Seoul.

NH All-One REIT sold the building, which it had purchased for 130.3 billion won, for 163 billion won, reaping a 25% profit, while Samsung FN REIT expanded its portfolio by raising 90 billion won to acquire the asset. While NH All-One REIT opted to “sell to reduce debt,” Samsung FN REIT chose a strategy of “buying to grow its portfolio.”

Purchased for 130.3 billion won and sold for 163.0 billion won… LTV also reduced

According to the financial investment industry on the 19th, NH All-One REIT completed the sale of A-One Tower Dangsan on the 13th. The transaction amount was 163.0 billion won, approximately 25% higher than NH All-One REIT’s purchase price of 130.3 billion won.

A-One Tower Dangsan is an office building located at 559 Gukhoe-daero, Yeongdeungpo-gu, Seoul. It consists of six basement levels and 17 above-ground floors, with a total floor area of 27,991.94 square meters (approximately 8,467 pyeong).

This sale is part of NH All-One REIT’s asset rebalancing strategy. The plan is to sell assets located in other areas of Seoul and reorganize the portfolio to focus on core business districts, such as the Central Business District (CBD) and the Gangnam Business District (GBD).

The proceeds from the sale will be used to repay NH All-One REIT’s debt. Consequently, the portfolio’s loan-to-value (LTV) ratio is expected to decrease by 2.9 percentage points (p), from the current 63.4% to 60.5%.

As the size of the debt decreases, interest expenses are also expected to be reduced. This is projected to have a positive impact on the expansion of distributable earnings in the future. NH All-One REIT plans to pay back the principal in November and distribute a special dividend in March of next year, based on the financial statements as of the end of December.

The new owner of A-One Tower Dangsan is Samsung FN REIT. While NH All-One REIT sold its Dangsan asset to raise cash and improve its financial structure, Samsung FN REIT has added the asset to its new portfolio as part of its strategy to secure office properties.

Samsung FN REIT Becomes New Owner of Dangsan Office… Secures 90 Billion Won

Samsung FN REIT has decided to borrow 90 billion won to acquire the new asset. The borrowing amount represents 22.41% of its equity capital of 401.60555 billion won, as reported in its consolidated financial statements as of April 30. The borrowing period runs from the 13th of this month to the 28th of next month.

Samsung FN REIT will raise 90 billion won by issuing electronic short-term bonds with an annual interest rate of 4.10%. KB Securities, NH Investment & Securities, Hana Securities, and Korea Investment & Securities are participating as underwriters.

This borrowing is being carried out within the bond issuance limit approved for Samsung FN REIT at its 13th Annual General Meeting of Shareholders. Upon maturity, the scale, terms, and maturity date of any refinancing will be determined based on market conditions at that time.

Samsung FN REIT has been aware since last year that A-One Tower Dangsan was on the market and has been preparing for its acquisition. Samsung FN REIT closed the sale of the Samsung Life Jamsil Building (now FN Tower Jamsil) on March 16 and proceeded with the bid after determining that it could add one more asset to its portfolio in the first half of this year.

Accordingly, it participated in the bidding for A-One Tower Dangsan last April, was selected as the preferred bidder, and closed the deal on the 13th.

Although the A-One Tower Dangsan is located in a non-core business district rather than a major business hub, Samsung FN REIT focused on the fact that, given the company’s current financial and asset scale, it could acquire the property without a large-scale capital increase.

Expanding Scale Without a Large-Scale Capital Increase… Taking on a ‘Challenge’ with a Prime Asset

The company chose Awon Tower Dangsan, which entails a relatively lighter burden, because acquiring prime assets in core business districts would require a large-scale capital increase, potentially leading to increased stock price volatility.

In particular, since the scale of this acquisition is within 30% of total assets, the process could be completed with a simple change report—without requiring amended approval from the Ministry of Land, Infrastructure and Transport—resulting in a relatively low administrative burden, according to the company.

“Amendment approval from the Ministry of Land, Infrastructure and Transport” refers to the administrative procedure of obtaining renewed approval from the Ministry—the competent authority—when changes are made to major land and transportation projects, such as previously approved urban development projects, implementation plans, or the registration of REIT asset management companies.

With this acquisition, Samsung FN REIT’s asset size has expanded to approximately 1.25 trillion won, significantly surpassing the 1 trillion won mark. Consequently, it has laid the groundwork to pursue even larger-scale, high-quality assets in the future.

A financial investment industry official stated, “Through the acquisition of A-One Tower Dangsan, Samsung FN REIT has increased its asset size and investment capacity without the burden of a large-scale capital increase, while simultaneously securing a foundation to acquire high-quality assets in major business districts in the future.”

The source continued, “This transaction is not merely a simple office sale but an example of the portfolio restructuring trend among REITs,” adding, “NH All-One REIT is selling assets in non-core business districts to restructure its portfolio around core business districts, while Samsung FN REIT is pursuing a strategy of expanding its portfolio by securing new assets.”