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Korean funds invest $62 mn to buy Philadelphia building: report

Jul 18, 2018 (Gmt+09:00)

The Construction Workers Mutual Aid Association (CWMA) and other South Korean institutional investors have invested 70 billion won ($62 million) to buy an office building in Philadelphia in a deal worth 180 billion won, a local newspaper reported, as they hunted for secondary US cities for higher yields.

CWMA put 30 billion won into a special purpose company (SPC) established for the property acquisition and unidentified other South Korean investors poured 40 billion won into the SPC, the Maeil Business Newspaper said last week.

They made the equity investment via a domestic vehicle for a target IRR of 15% over a five-year investment period. It will be managed by KB Asset Management Co. Ltd.

An unknown foreign investor extended a 110 billion won loan to the SPC.

“We chose the office building in Philadelphia because it was more affordable than those in New York areas where prices soared recently and we thought the city has high growth potential,” the paper quoted a CWMA source as saying.

It gave no details about the building.

CWMA, a $3 billion savings fund, has invested in office buildings in secondaries US cities over the past few years, alongside real estate investments in Australia and Poland.

Earlier this year, it made a joint investment of 60 billion won ($56 million) with a South Korean insurance firm in a 132 billion won ($123 million) deal to acquire an office building in southeast Denver, Colorado, for an expected annual return of 8.4%.

In 2016, CWMA invested 35 billion won in a domestic fund that had purchased Safeco Plaza, a 50-story skyscraper in downtown Seattle, for $387 million.

Its AUM reached 3.4 trillion won ($3 billion) at end-2017, of which fixed incomes accounted for 65% and alternatives 14%. Last year, it posted a 4.24% return on investment, its highest in seven years.

Photo: Getty Images Bank

Yeonhee Kim edited this article

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