[Sky’s the Limit] Booyoung’s real estate dilemma on acquiring Samsung assets
The Korea Herald is publishing a series of articles and videos about some of the most expensive and fascinating landmark office buildings in Seoul. -- Ed.
Defining the symbolic cityscape of Seoul is Sejong Main Street, a 10-lane road running across the downtown area, stretching all the way from Seoul Station to Gwanghwamun Square.
Halfway along this main road, just north of Sungnyemun or the Southern Gate of Seoul, is the so-called Taepyeongro zone, locaton of landmark buildings such as Deoksugung Palace and Seoul City Hall.
Among the numerous high-priced edifices in the vicinity is a 25-story, brown-colored, shiny-textured building, which many people still refer to as the Samsung main building, to the perpetual distress of the incumbent owner.
The building since 2016 has belonged to Booyoung, a real estate-rich construction group and South Korea’s 16th largest conglomerate by assets.
After purchasing the building for 580 billion won ($511 million) from Samsung Life Insurance, it was renamed as Booyoung Taepyeong Building. The deal drew attention, not just for the amount, but because it was perceived as market bigshot Samsung’s signal of asset liquidation.
Booyoung has made efforts to make the most out of its expensive new acquisition and more importantly, to mark its new presence over the vestige of the previous owner.
While welcoming several companies -- some of them Samsung affiliates -- as tenants, the construction group also created an extensive food and beverage zone on the basement floor.
The 2,500 square meter-wide area, named Sikgaekchon after a famous cartoon series by Huh Young-Man, features various restaurant franchises that appeared in the cartoon.
Despite the costly renovation, however, Booyoung apparently failed to capitalize on its investment. While the Taepyeong building struggled with a vacancy rate as high as 40 percent last year, other assets that Booyoung acquired from Samsung also fell below profit expectations.
Marking a similar case is Booyoung Eulji Building, the former headquarters of Samsung Fire and Marine Insurance, which it bought for 440 billion won in a separate deal in 2016.
But weighed down by the vacancy rate and low profitability, the new owner put it for sale in 2018. The deal was canceled earlier this year amid the lack of priority bidders.
Booyoung’s distress over the former Samsung buildings largely occurred during the absence of Chairman Lee Joong-keun.
Indicted for embezzlement and breach of trust, Lee was handed a five-year jail term and 100 million won fine in November last year, a decision which he immediately appealed.
Amid the prolonged leadership vacuum, speculations mounted that the construction group may even pull out of the real estate leasing market at some point.
By Bae Hyun-jeong/The Korea Herald (email@example.com)