Mirae Asset, SK Sec buy German property in share deal

Mirae Asset Daewoo Co. Ltd. and SK Securities Co. Ltd. have recently closed a purchase of an office building leased to a department of the German federal government in Cologne via a share deal.

The two South Korean brokerage houses acquired the entire equity interest in the six-floor property from M&G Real Estate, a unit of London-based Prudential Plc., in a proprietary transaction.

They declined to provide financial terms of the transaction, citing a confidentiality agreement.

It was first reported by MoneyToday’s premium news service, The Bell, on Oct. 10, and confirmed by sources with knowledge of the matter on Oct. 11.

The two brokerage companies split the ownership to 89.1% for Mirae Asset and 10.1% by SK Securities.

They invested through a domestic fund run by Hyundai Asset Management Co. Ltd.

Deloitte, a global accounting and consulting firm, arranged and advised the proprietary deal, after tapping South Korean investors to sell the 20,413-square-meter property, according to the report.

The building is located in Deutz on the right bank of the river Rhine, which is Cologne’s central business district and transportation hub.

It had been used as the headquarters of Lufthansa previously.

After renovation, a department of the German federal government has been using the entire space since 2015. It has a remaining lease term of 15 years.

The property’s cap rate is 3.55%, slightly above the average 3.47% of prime office buildings in the city of Cologne.

Rents are expected to rise by 1.8% per year, reflecting annual consumer inflation, the report added.

The property acquisition comes after Mirae Asset Global Investments Co. Ltd., a sister company of the brokerage firm, bought the Cologne City Hall building in Germany in 2016, funded from its first blind-pool fund launched for global real estate investment. The fund closed on 450 billion won in 2015.

Last year, Mirae Asset Daewoo bought the office tower of Vodafone Group in Dusseldorf, Germany for around 350 billion won.

By Daehun Kim

daepun@hankyung.com

(Amended to drop financial terms at the request of sources because of a confidentiality agreement they signed with the counterpart of the transaction. A quote from a Deloitte source was also deleted.)