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Alternative investments

IGIS Asset, Hana buy $390 mn US Amazon logistics portfolio

By Dec 21, 2020 (Gmt+09:00)

(Courtesy of Amazon.com)
(Courtesy of Amazon.com)

South Korea’s IGIS Asset Management Co. and Hana Financial Investment Co. have jointly acquired three pre-completed logistics centers in the US for $390 million, which are under a long-term lease to Amazon, the company sources said on Dec. 21.

They made the purchase via a joint venture with the US real estate developer Scannell Properties. The warehouses are located respectively in Stafford, Virginia; Kansas City, Missouri; and Lakeville, Minnesota. Under a 15-year contract with the US online retail giant with an extension option, the properties are scheduled to be completed in the second half of next year.

The acquisition price is equal to a cap rate in the low 5% range, after dividing the property’s net operating income with its asset value. The portfolio is expected to generate at least a 7% dividend yield.

“In order to secure this deal on a proprietary basis, the consortium of Hana Financial and IGIS Asset Management actively entered into discussion with Scannell Properties from the early stages of negotiation,” said one of the sources.

"The three companies will build a long-term partnership to explore additional investments in logistics centers under contracts with top-rated tenants such as FedEx and DHL, as well as Amazon,” the source added. 

For the acquisition, the IGIS-Hana consortium will buy preferred shares in the JV formed with Scannell Properties. Around the time when the three warehouses are completed later next year, the two Korean companies will pay the remaining balance and take full ownership of the portfolio. Preferred shares represent 80% of the JV's equity capital, with common shares accounting for the remaining 20%. 

The sources said they were able to secure the assets at an attractive price compared to their current market value, because they entered into discussion on the investment in the first half of the year when COVID-19 was already a global phenomenon.

Amazon-leased logistics centers have been at the top of Korean investors' buying lists, with the coronavirus pandemic driving e-commerce growth even higher. They provide investors with steady income streams and are easier to sell than other properties.

In August, IGIS Asset acquired a pre-completed logistics center leased to Amazon in Delaware, US for approximately 200 billion won, after it purchased three Amazon logistics facilities in Paris, Barcelona and Bristol for a combined 595 billion won.

IGIS’s global portfolio accounts for 30% of its assets under management, or worth 9 trillion won. Last year, it opened its US subsidiary, IGIS USA, which contributed to sourcing and completion of the logistics deal with Scannell.

Separately, Hana Alternative Asset Management Co., an affiliate of Hana Financial, recently exited from two Amazon-leased logistics centers in Poland for around 240 billion won ($217 million), reaping over 10% average internal rate of return

Write to Sang-eun Lucia Lee at selee@hankyung.com

Yeonhee Kim edited this article.

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