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Real estate

JR Global REIT to complete $300 mn stake purchase of NY building

The stake purchase was postponed by three months to end-2021 due to delayed financing

By Oct 06, 2021 (Gmt+09:00)

498 7th Ave. New York (Source: Google Maps)
498 7th Ave. New York (Source: Google Maps)

South Korea's JR Global REIT Co. will acquire a 49.9% stake in an office building in New York for 385.5 billion won ($323 million) by the end of this year from Hanwha Asset Management Co., a Korean investment company.

To complete the acquisition which has been delayed due to its adjusted financing schedule, JR Global will raise about 200 billion won through bond issues and loans this month, according to its regulatory filing last week. It will inject an additional 185.5 billion won on its balance sheet into the transaction.

In May of this year, Seoul-based Hanwha Asset acquired the 49.9% stake in the property from JPMorgan Asset Management for $340 million, on behalf of JR Global. The other 50.1% stake in the building on 498 7th Avenue in Midtown Manhattan is owned by an unidentified company.

The Korea Economic Daily Global Edition in May incorrectly put the value of the stake at $140 million.

The 25-story office and retail property has a floor space of 78,251 square meters. It is within a 15-minute walking distance of New York's landmark buildings, including Times Square, Empire State Building and New York Public Library.
498 7th Ave. New York (Courtesy of George Comfort & Sons, Inc.)
498 7th Ave. New York (Courtesy of George Comfort & Sons, Inc.)

The Service Employees International Union (SEIU), one of the largest labor unions in North America, occupies 61% of the office space under an agreement that ends in 2050.

The New York office building will become JR Global REIT's second asset after the Finance Tower in Brussels. The second-tallest building in the capital city of Belgium houses Belgium's Federal Public Finance Service under a long-term lease contract until 2034.

After the New York office stake purchase, the REIT operator will maintain its current dividend yield of 7% per annum, or annual dividend payout per share divided by its share price.

JR Global became the country's first listed real estate investment trust (REIT) backed by overseas property in August 2020.

Write to Jin-sung Kim at jskim1028@hankyung.com

Yeonhee Kim edited this article.

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