KT&G Corp., the world’s fifth-largest tobacco producer, is set to divest an office tower in Bundang, South Korea, to Pebblestone Asset Management for an estimated 120 billion won ($90 million). The move comes as KT&G seeks to restructure its real estate portfolio in response to ongoing challenges in the domestic property market.
Pebblestone Asset Management, a Seoul-based firm managing approximately 4 trillion won in assets, was selected as the preferred bidder for the 12-story building located near Pangyo, often dubbed South Korea’s Silicon Valley. KT&G initially acquired the property in 2018 for 68.5 billion won from Richmond Asset Management Co.
The sale is part of KT&G’s broader strategy to offload underperforming assets, including a potential sale of another office building in downtown Seoul. This restructuring effort reflects the company’s shift in focus, as revenue from its real estate ventures has dwindled to 9.4% of total sales in the first half of 2024, down from 12.9% in 2021.
KT&G has historically invested in real estate using profits from its core tobacco business, developing residential projects on former tobacco factory sites and purchasing commercial properties. However, with the current market downturn, the company is now realigning its portfolio to better weather the economic climate.
