JR AMC to buy Hungary office building for $47 mn

JR AMC Co. Ltd., a real estate investment trust in South Korea, has agreed to buy a pre-completed office building in Budapest for 42.3 million euros ($47.4 million), in its first investment in Eastern Europe which is expected to deliver over 10% returns per year.

The Korean REIT has made a 5% down payment for the Nordic Light Trio to Sweden-based developer Skanska. It will pay the remainder after the construction is finished in the first half of next year, according to industry sources on July 22.

NH Investment & Securities Co. Ltd. will raise funding for the transaction as the underwriter.

Nordic Light Trio is the third building of the existing Nordic Light office complex with a leasable area of 14,000 square meters.

It is located on the Pest side of the Danube River, or the eastern part of the Hungarian capital.

Ninety-eight percent of the new building is leased to a unit of Roche, a Swiss healthcare company, and others.

JR AMC expects the investment to deliver an internal rate of return of over 10% per year, considering its future value appreciation.

Rental incomes only will produce returns of around 6% per annum in terms of the euro currency, according to the sources.

The deal came after JR AMC had snapped up office buildings in Paris, Dublin and Vienna on behalf of South Korean institutional investors.

Earlier this year, the company had acquired a commercial building west of Paris for 220 billion won ($194 million) for Hana Financial Investment Co. Ltd.

As part of the European Union, Hungary, Czech and Poland have been emerging as their popular destinations because of their economic growth potential.

By Hyun-il Lee

hiuneal@hankyung.com