South Korea’s National Pension Service (NPS) is expected to reap up to about 200 billion won ($162 million) in profits through a local office building sale.

According to the real estate industry on May 26, more than 20 buyers including trust company and asset management firms applied late last week for the main bidding in the sale of CJ Cheil Jedang Center.

Even before the bidding as many as 30 investors have been interested in this sale, which has continued until the bidding. The seller plans to select qualified candidates for the interview soon. The preferred bidder is expected to be confirmed next month.

Bidding prices also seem to have risen due to keen interest. “It was an item that many buyers were interested in even before the bidding,” a real estate industry source said. “As fierce competition was expected, some bidders participated in the bidding with a high price.”

The highest bid price is in the early 20 million-won range per 3.3 square meters. Based on this, CJ Cheil Jedang Center’s expected sale price is about 530 billion won.

The winning bid for the 20-story building had been expected to be around 400 billion won.

The success of the bid is mainly due to the elimination of vacancy risks. The building houses CJ Cheil Jedang and the group’s affiliates CJ Freshway and CJ Foodville. The occupancy rate is now 100 percent. The lease term with CJ Cheil Jedang and CJ Freshway was extended from October 2020 to October 2027 at the end of last year.

With the successful sale of CJ Cheil Jedang Center, the NPS is expected to successfully retrieve its investment. The building is owned by ARA-NPS No.2 REIT (Real Estate Investment Trust).

The REIT, founded with a 100 per cent investment by the NPS, took over ownership in October 2010 when the sale price was 334.1 billion won. Including an incidental cost of about 14 billion won, a total of 345.9 billion won was spent on the purchase and 337.4 billion won was paid by the NPS. Based on this input cost, estimated profit from the sale is around 200 billion won.

Earlier this year the NPS also sold another prime office building, Namsan Square, to a consortium of IGIS Asset Management and the U.S. buyout group Kohlberg Kravis Roberts (KKR) for about 505 billion won, which was also more than the market expected. (Reporting by Lee Myung-gwan)