Korean Consortium Buys AIG Building for Bargain Price

Korean capital has advanced into Wall Street for the first time by purchasing a high-rise commercial building in the U.S. financial center.

A consortium led by Kumho Investment Bank last week paid in full 150 million U.S. dollars to buy the AIG headquarters building after being selected as the preferred bidder. The consortium beat out 30 other consortia from 17 countries in June.

The Kumho-led consortium held a housewarming party by inviting dignitaries the day when it received ownership rights to the skyscraper.

Attending the event were Elizabeth Berger, president of the Alliance for Downtown New York, a coalition of Wall Street building owners; Larry Silverstein, a big name real estate developer and chairman of a company rebuilding the World Trade Center; and Fredrik Unchel, AIG president for realty management.

Berger said, “We welcome Korea’s advance into Wall Street. Today will mark a new chapter in Lower Manhattan history.”

Silverstein said, “It is amazing that Korean companies bought this beautiful building built in the 1930s.”

U.S. real estate insiders consider the Kumho-led consortium’s purchase of the AIG building a very successful deal. The 150 million dollars is a bargain considering that the edifice was valued at 800 million to one billion dollars in the real estate boom, and given that its assessment price was 400 million dollars.

Woo Young-shik, chairman of Youngwoo & Associates, told reporters that Silverstein told him, “It’s incredible that (the consortium) bought the building at that price. If that was the price, I should have bought it.”

The consortium got the sale price because AIG was forced to seal the deal due to time constraints. The insurance giant promised the U.S. government to sell its headquarters building in return for bailout funds.

Lee In-young, president of Woori Private Equity, which is a majority stakeholder of the Kumho-led consortium, said, “The situation is similar to the time when Korea had to sell Seoul Finance Center to foreign capital in the Asian financial crisis.”

AIG’s Unchel participated in the event under the condition that he was neither interviewed nor photographed by media.

Moreover, AIG and the U.S. government reportedly conducted checks to figure out the trustworthiness and financial situation of Kumho, Woori and Youngwoo before choosing to sell the building.

The consortium signed a one-dollar lease contract with AIG to allow the insurer to use the building free of charge through next year. Thereafter, the consortium is considering transforming part of the upper level units into residential apartments or condominiums.

higgledy@donga.com