Eugene Investment acquires Poland office building for $61 mn

Eugene Investment & Securities Co. Ltd. has entered the European real estate market with the purchase of an office building in Warsaw, Poland for about 70 billion won ($61 million), a deal expected to yield nearly 9% per year.

The small-sized South Korean brokerage firm acquired the Feniks building from German real estate investment firm Patrizia AG via a vehicle run by Seoul-based JR AMC Co. Ltd., according to investment banking sources on Jan. 2.

It was not immediately known how much Eugene borrowed to fund the acquisition.

Completed in 2012, the eight-story building is fully leased with Polish state-run bank BOS occupying most of the 10,000-square-meter leasable space under a long-term contract.

It is expected to deliver an annualized return of 8.6%, including currency hedging premiums, and was already sold down to unidentified domestic institutional investors.

The deal comes a year after two small Korean financial services companies snapped up the Cedet building, a landmark office building in Warsaw, for 183 billion won.

As the surge in office prices in London, Paris and Berlin over the past few years pulled lower their investment returns, Korean institutions are shifting towards eastern Europe such as Poland, Hungary and Czech, part of the European Union.

In July 2019, JR AMC bought the Nordic Light Trio in Budapest before completion for 42.3 million euros ($47.4 million), in its first investment in Eastern Europe which is expected to return over 10% per year.

Eugene Investment is bolstering investment banking business with new hires. It recently set up an alternative investment team within its expanded IB division.

By Hyun-il Lee

hiuneal@hankyung.com