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Alternative investments

Korean investors in renewed push for global property deals

May 07, 2021 (Gmt+09:00)

Midtown Center in Washington DC (Courtesy of Carr Properties)
Midtown Center in Washington DC (Courtesy of Carr Properties)

South Korea's IGIS Asset Management Co. and Hana Financial Investment Co. have acquired a 49% stake in the headquarters of the US mortgage lender Fannie Mae for 250 billion won ($223 million), followed by another Korean consortium's 290 billion won purchase of a logistics center in the Netherlands. 

Both IGIS and Hana bought the stake in the two-building Midtown Center in Washington DC from Carr Properties. The US real estate investment firm holds the remaining interest in the 80,717-square-meter property.

IGIS Asset will raise 250 billion won via a real estate investment trust to fund the equity investment, according to sources with knowledge of the matter on May 7.

Separately, Seoul-based Midas Asset Management Co. and NH Investment & Securities Co. bought a 140,000-square-meter new logistics center in Bleiswijk near Rotterdam, the Netherlands, reportedly for 290 billion won ($260 million) in April.

The property is leased entirely to Zalando, Europe’s leading online fashion platform and is expected to yield a mid-7% internal rate of return on average for the five-year investment period, according to a report from the Financial News in Korea. NH Investment underwrote the purchase to sell it down.

The Zalando property deal comes just after Midas Asset acquired Amazon's three last-mile distribution centers in Germany for 100 million euros ($121 million) in March.

“This deal was transacted entirely during the ongoing coronavirus pandemic, including site inspections, negotiations, audits and acquisition," said Matthias Brodesser, head of transaction management international at Warburg-HIH Invest, in a statement released last week. 

Warburg-HIH Invest acquired the Zalando-leased property on behalf of both Midas and NH Investment.

"Our Korean investors had the capacity to act even during these special times and show keen interest in the European property market,” he added.

Zalando's logistics center in Bleiswijk, the Netherlands (Courtesy of Zalando)
Zalando's logistics center in Bleiswijk, the Netherlands (Courtesy of Zalando)

Chris Park, managing director of NH Investment, said that the transaction further diversified the brokerage company's asset mix into the latest trend in logistics in the Netherlands since its investment in the office asset, Edge Amsterdam West, in Amsterdam in 2018. 

"We are pleased with the progress especially during the COVID-19 situation," Park added in the joint statement.

RESUMPTION OF OVERSEAS BUSINESS TRIPS

The recent series of overseas investments highlighted Korean institutional investors' renewed push for global investments to prepare for post-pandemic opportunities. Other Korean asset managers also began to send their employees abroad to hunt for investments.

Last month, a number of employees of Mastern Investment Management Co. and Kiwoom Securities Co. flew to France to conduct due diligence on six last-mile logistics centers under construction. They plan to acquire them upon completion of construction for a combined 250 billion won and package them into a single vehicle to sell them down. 

For the one-week due diligence, those employees had to undergo a one-week quarantine upon arrival in France and a two-week self-isolation when they came back to South Korea.

"The almost one-month business trip was burdensome, but we concluded now is the time to make preemptive investments and pushed ahead with the business trip," said a Mastern Investment source. 

But some remained cautious about cross-border deal sourcing in the pandemic situation and thus, switched to investing through global investment funds.

In March this year, Meritz Alternative Investment Management Co. has committed $400 million to Brookfield Real Estate Finance Fund VI, a commercial real estate fund targeting mezzanine debt investments.

"Because of the COVID-19, we have switched to investing through funds managed by highly-recognized investment companies, instead of making project-based real estate investments," said an investment banking source.

By A-Young Yoon

youngmoney@hankyung.com

Yeonhee Kim edited this article.

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