Mirae Asset poised to buy office building in Canberra for $245 mn

South Korea’s Mirae Asset Global Investments Co. Ltd. has been picked as the preferred buyer of a 12-story office building in Canberra, which is entirely occupied by Australian government’s Department of Education, Employment and Workplace Relations (DEEWR).

The deal, worth A$320 million ($245 million), is expected to generate an annual return of between 4 and 6%, according to investment banking sources on Feb. 3. DEEWR is understood to continue to use the property for another 10 years or longer.

The building, 50 Marcus Clarke Street, was built in May 2010 and is currently owned by Singapore’s investment company, CIMB Trust Capital. Mirae Asset expects to sign an agreement for the acquisition within this month, upon completion of due diligence.

Mirae, a top mutual fund manager in South Korea, has been leading overseas real estate investment among domestic institutions. Its cross-border acquisitions of properties in 2016 include State Farm Insurance’s office complex in Texas; a joint purchase of the headquarters building of online retail giant Amazon in Seattle; and a Hyatt hotel on Hawaii’s Waikiki Beach.

Mirae plans to launch a public real estate fund based on the 50 Marcus Clarke Street, which has gross floor area of 40,000 square meters, around March, the Maeil Business Newspaper reported on Feb. 3. The size of the public fund has yet to be determined.

Last September, the South Korean investment firm had raised $270 million in a public real estate fund to finance the purchase of State Farm Insurance’s office complex in Texas, and the closed-end fund was fully subscribed only in 10 days.

As competition for real estate in top cities is lifting asset values, South Korean investors have been turning to less crowded niche segments and second-tier cities.

Teachers’ Pension, a South Korean pension fund, said last month that it would invest A$100 million in buying an office building in Brisbane, Australia, which is leased by the Brisbane city government.

By Dowon Im
van7691@hankyung.com