NH Investment seeks to buy L’Oreal’s Paris office building from ADIA

NH Investment & Securities Co. Ltd., a brokerage arm of South Korea’s agricultural cooperative, is in the early stages of negotiations with the Abu Dhabi Investment Authority (ADIA) to buy an office building northwest of Paris for an estimated 900 billion won ($779 million), which L’Oréal is to lease under a long-term contract.

ADIA has put up for sale Ecowest, a 60,000-square-meter office complex under construction in the suburbs of Paris. The sovereign wealth fund had bought the property for €477 million from BNP Paribas Real Estate in early 2015.

South Korea’s FG Asset Management Co. Ltd. had received a mandate late last year to arrange the sale of the building, located in 80/82 Quai Michelet in Levallois-Perret, according to investment banking sources on March 10.

Initially, the asset management firm had teamed up with a South Korean brokerage house to acquire the property. But the joint acquisition plan fell through after the latter’s investment review committee rejected the deal.

After adjusting investment risks, pricing terms and conditions and deal-closing timeframe for the office complex, FG Asset contacted other South Korean securities firms. Among several domestic brokerage companies showing interest in the building, NH Investment is strongly considering the proposed acquisition.

“It is true that NH Investment & Securities is aggressive about the deal, but they are still in the early stages of reviewing it,” one of the sources told the Korea Economic Daily.

He added that a deal closing for the office complex would be likely to happen after July when its construction is scheduled to be completed.

The prospective deal comes after South Korea’s Vestas Investment Management Co. Ltd. had been selected as a preferred buyer of an office building of L’Oréal near Paris late last year.

In December 2016, Korea Investment & Securities Co. Ltd. also signed an agreement to buy a 42,200-square-meter office building of Swiss pharmaceutical company Novartis under construction in Paris for about 480 billion won, with the aiming to sell down its stake in the property to other South Korean institutional investors.

South Korean institutional investors have been among aggressive cross-border buyers of US and European real estate in recent years. They are now quickly shifting toward non-UK European commercial real estate away from US properties, driven by low interest rates in the continent and the weakening euro currency.

Paris is emerging as an attractive destination for real estate investors as the city is replacing London as a Europe’s head office of global companies after the Brexit decision.

By Daehun Kim

daepun@hankyung.com