Teachers' savings fund to invest $85 mn in Amazon logistics center in US

The Korean Teachers’ Credit Union (KTCU) will invest 100 billion won ($85 million) in a pre-completed logistics center leased to Amazon.com in Delaware, US for an expected annual return of around 8%, said a KTCU source on Sept. 14.

Seoul-based IGIS Asset Management Co. Ltd. acquired the property for approximately 200 billion won last month. Hana Financial Investment Co. has set up a 200 billion won vehicle to fund the purchase as the underwriter.

Amazon will occupy the distribution center under a 20-year lease once it is completed around July of next year. The facility will have a floor space of around 350,000 square meters.

KTCU will commit 100 billion won to the domestic vehicle, in which Yellow Umbrella Mutual Aid Fund is also considering participating, according to another source. The fund is a savings association for South Korea’s small business owners with 12 trillion won under management as of the end of 2019.

“Its location with quick, easy access to Interstate 95, an important interstate highway, and its five-story structure increased the allure as an investment target,” the KTCU source told The Korean Investors. “We are expecting to earn around 8% in an annual internal rate of return from this investment.”

Including the pre-completed purchase, South Korean institutional investors have pumped around 720 billion won ($608 million) into seven Amazon-leased logistics centers across four countries since the start of this year.

Early this year, NH Investment & Securities Co. took a 50.1% stake in an Amazon distribution center in Japan for around 150 billion won ($130 million) in a joint acquisition with the US-based Nuveen Real Estate.

NH Investment is aiming to list a real estate investment trust backed by the distribution center in Odawara, 80 km southwest of Tokyo, around November.

South Korean brokerage firms and asset managers have been keen to invest in Amazon-leased logistics facilities, with the coronavirus pandemic driving e-commerce growth even higher.

Mirae Asset Global Investment Co. was recently named the preferred buyer of three logistics centers in Indiana, Ohio and North Carolina.

Last year, IGIS Asset Management acquired three logistics facilities leased to Amazon in Paris, Barcelona and Bristol for a combined 595 billion won.

Write to Seon-pyo Hong at rickey@hankyung.com