Mirae Asset launches public fund for $820 mn State Farm complex deal

  • 2016-09-21

South Korea’s Mirae Asset Global Investments Co. Ltd. has purchased State Farm Insurance’s four-building office complex in Texas for 900 billion won ($820 million), in a deal that appears to be one of the highest-price sales for North Texas real estate.

statefarm1To finance the purchase, Mirae Asset will raise 300 billion won in a public fund from retail investors in South Korea; another 120 billion won from a private equity fund; and the balance through loans, a Mirae Asset spokesman said on Sept. 21.

State Farm Insurance has put the newly-constructed, four-building campus in Richardson, Texas, since early this year. All of the four office buildings will be leased back to the U.S. insurer for 20 years.

The State Farm complex is the centerpiece of the $1.5 billion CityLine development, a massive State Farm-anchored mixed-use project near an expressway and a turnpike in Richardson, according to U.S. media reports. State Farm had bought the CityLine buildings from a Dallas-based developer.

The 300-billion-won ($270 million) public fund that Mirae launched in South Korea this week, Mirae Asset Maps U.S. Real Estate Public Fund, is the first property fund to be raised from South Korean retail investors for the purpose of U.S. real estate investment. It is also the first time for a South Korean financial services company to set up a public fund backed by a U.S. property which the firm has already acquired.

The closed-end fund will not be redeemable before expiration, or for a period of seven and a half years. The target return of 4~6% a year may depend on the fluctuations of the dollar/won exchange rate. The fund will be available until Sept. 28 through Mirae’s brokerage and life insurance units.

To secure liquidity, Mirae will list the real estate fund on the Korea stock exchange within 90 days after its inception. It is not currency hedged, making it vulnerable to the won’s weakness and a possible slowdown in the U.S. property market.

Investors in the fund will receive dividend incomes every half year starting from end-June, 2017, based on rent payments from State Farm.

Mirae Asset, a top mutual fund manager in South Korea, has been ramping up alternative investments worth in excess of 9 trillion won. Earlier this year a Mirae Asset-led consortium bought the headquarters building of online retail giant Amazon in Seattle for about $245 million. The asset manager’s recent overseas real estate purchases include a $780 million acquisition of a Hyatt hotel on Hawaii’s Waikiki Beach.

By Woosub Kim duter@hankyung.com

<Edited by Yeonhee Kim>