Denver office buildings draw yield-hungry Korean funds

To finance the acquisition of 1670 Broadway, Hana Financial committed 120 billion won to a domestic fund launched for the transaction by Hyundai Asset Management.

The brokerage firm is selling down the equity interest in the property to domestic institutional investors.

Additionally, Hana Financial borrowed 100 billion won in a five-year loan at a fixed rate of 4.10% in the United States in September, secured on the 36-story tower, according to South Korea’s Internet media Global Economic News.

Teachers Insurance and Annuity Association (TIAA) occupies 51% of the space on a long-term lease.

The building’s cap rate, or net rental incomes divided by the purchasing price, is mid-5%, according to online news provider edaily in early October.

Meanwhile, Samsung SRA was recently chosen as the preferred buyer of US Bank Tower in central business district of Denver.

It is seeking to acquire the multi-tenant property via a blind-pool fund. No further details of the possible deal were available.

Driven by youth population growth and high average incomes relative to other US cities, property value in Denver is expected to rise further.

Separately, Jack Kim, founder and principal of US-based KORE Investments, recently told the Korean Investors that South Korean investment funds are diversifying away from landmark buildings in big US cities in search of higher returns.

In doing so, they prefer local management firms to global managers so that they can secure high-yielding real estate assets, he noted.

KORE, focusing on assets in Denver and Chicago, arranged the Re/Max Plaza building transaction for the CWMA and the insurance company.

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