Mirae Asset’s $270 mn property fund for State Farm complex fully subscribed

  • 2016-09-29

Mirae Asset Global Investments Co. Ltd. has raised the planned 300 billion won ($270 million) in a public property fund in 10 days after it was launched for a U.S. real estate purchase, underscoring the growing popularity of property funds in South Korea.

The closed-end fund, targeting a 4~6% annual return, attracted retail investors in search of stable dividend incomes. They put a minimum 10 million won ($9,107) into the fund, respectively, as required, the South Korean asset management firm said on Sept. 28.

The fund was set up to finance part of Mirae Asset’s recent acquisition of State Farm Insurance’s four-building office complex in Richardson, Texas from the insurer in a 900 billion won ($820 million) deal. For the purchase, the asset management firm plans to raise an additional 120 billion won from a private equity fund, and borrow 480 billion won.

It was offered for sale through brokerage and insurance outlets of the asset manager between Sept. 19 and Sept. 28. The Mirae Asset fund became the first public fund in South Korea, excluding bond investment funds, to raise more than 200 billion won so far this year.

State Farm will lease back the whole office buildings for 20 years, during which the rents are set to rise by 2% every year, a Mirae Asset source said. The rent incomes will generate stable cash flows, while the fund is not currency hedged.

“It was confirmed that there is a strong demand for alternative investments, away from bonds and stocks. Going forward, an array of products based on a variety of onshore and offshore assets are expected to be introduced in the domestic public fund market,” the Chosun Ilbo newspaper quoted another Mirae Asset source as saying.

By Hyung Suk Song

click@hankyung.com

<Edited by Yeonhee Kim>