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Korean fund to lend $423 mn for Canada’s supertall construction

Sep 07, 2019 (Gmt+09:00)

IGIS Asset Management Co. Ltd. has collected C$560 million ($423 million) from South Korean financial institutions to lend for The One building, a mix-use skyscraper under construction in Toronto, Canada.

The debt has an initial three-year term with a one-year extension option. It will be used to fund the 85-story skyscraper development which reportedly costs $1 billion, the Asia Business Daily, a Korean newspaper, reported earlier this week.

IGIS provided the debt funding to Mizrahi Developments, the project's developer. An IGIS Asset source confirmed the report.

Of the total of C$560 million, Meritz Securities Co. Ltd. committed C$226.6 million and almost half of its commitment has been invested on capital calls.

Meritz completed the resale with a principal repayment guarantee.

Other participants in the investment vehicle and expected returns were not disclosed.

The One building is set to be the tallest building in Canada when completed in the next few years. It will consist of retail and residential facilities.

“Skyscrapers in main shopping streets in Toronto are emerging as safe-haven assets because of their locations and the low risk of being unable to sell,” the daily quoted an unnamed alternative investment source as saying.

The source added that the skyscraper construction boom in Canada is fueling interest among Korean institutional investors which are seeking to balance real estate portfolios heavily skewed towards the US, Europe and Australia.

The debt investment comes as Korean investors are struggling in Europe's real estate market to compete with European rivals  as money inflows from European retail investors pick up.

In a recent auction for a commercial building in Warsaw, Poland, two Korean bidders lost to a German investment firm which placed a much higher bid and proposed it complete the payment within one month without borrowing, an industry source told the Korean Investors.

Meanwhile, Samsung Securities Co. Ltd. is seeking to join forces with Canadian pension scheme La Caisse de dépôt et placement du Québec (CDPQ) for infrastructure investments in developed markets.

By Hyun-il Lee

(Photo: Getty Images Bank)

Yeonhee Kim edited this article

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