Korea Investment and Securities bought some 1.5 trillion won worth of real estate abroad so far this year, the most among Korean securities firms, boosting investments in overseas real estate to diversify its assets due to a worsening financial business environment and low interest rates in Korea.
The securities firm also plans to bid for a stake in Woori Bank by participating in an open bidding to be held next month joining some 16 bidders including Hanwha Life, Tongyang Life, Korea Investment Holdings, Kiwoom Securities and Vogo Fund. The bidders also will include foreign firms such as Anbang Insurance Group and Orix Private Equity of Japan.
According to investment banking sources on Oct. 10, Hantu kicked off its real estate purchase binge from early this year by buying a building in Canberra, Australia, for 200 billion won, followed by a logistics center in Poland for 100 billion won, the national tax office building in Philadelphia in the United States for 440 billion won, the Astro Tower in Brussels, Belgium, for 200 billion won and the Novartis Building in Paris for 480 billion won. The five buildings purchased so far this year cost some 1.45 trillion won.
According to investment bank sources on Feb. 23, Korea Investment & Securities (Hantu) and FG Asset Management inked a deal to buy the Astro Tower in Brussels, Belgium, marking the first-ever investment in a Belgium-based property by a South Korean institutional investor.
Hantu is said to be preparing to invest half of the funds using its own capital, while raising the other half by taking out loans. The investment is expected to generate a stable return of 6 percent to 7 percent per annum.
The Astro Tower, built in 1976, is located in the northeast of Brussels. The tower, which has been under extensive remodeling, will reopen around July. It stands 107 meters tall, making it one of the biggest buildings in the country. The tower is situated near subway stations in a busy district.
Korea Investment & Securities Co. pursued the acquisition of Novartis AG’s office building in Paris for 400 billion won ($341 million) in partnership with U.S.-based Millennium Asset Management, according to investment banking (IB) industry.
The company has recently finished due diligence and plans to complete the investment in the next two months. Hantu will put up 170 billion won, and the rest will be financed with loans from financial institutions in France. The investment is expected to generate annual return of 6 to 7 percent.
The office building commanding an area of 34,000 square meters is still under construction and scheduled to be completed in 2018.
After completion, it will be rented out to the global healthcare giant Novartis for 10 years. Korean Investment & Securities plans to resell its stake in the building to institutional investors in Korea, and it has already begun talks with investors about the stake sale, according to the sources.
Hantu has been expanding its investments into overseas real estate in a move to seek new investment sources since late last year. South Korea’s NH Investment & Securities Co. Ltd. bought Woolworth’s headquarters in Sydney for $336 million early this year, and Kiwoom Securities Co. Ltd. acquired an office building in Dallas, KPMG Plaza.
This month, Mirae Asset Global Investments Co. Ltd. raised the planned 300 billion won in a public fund to finance its acquisition of State Farm Insurance’s office building tower in Texas, after acquiring a hotel in Hawaii and Amazon’s headquarter building in Seattle.
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A view of the design of the Novartis Building in Paris that KIS bought for 480 billion won.(Photos: KIS)
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