By Gyung-Bong Koh
Korea Post will acquire the IZD (Internationales Zentrum Donaustadt) Tower, a landmark building in Vienna, Austria, at the cost of 270 million euros (US$303.5 million). According to investment banking industry sources on March 21, the national postal service and KORAMCO Asset Management are currently at the last stage of negotiations with Signa Real Estate Capital Partners, the owner of the 142-meter tower. Under the terms of the deal, Korea Post’s insurance business unit will invest in a real estate fund run by KORAMCO, which in turn purchases the Vienna building. The final deal is expected to be signed by the end of this month at the earliest.
Of the 270 million euros, KORAMCO’s real estate fund will pay 99 million euros out of its pocket while the remaining 171 million euros from loans. Korea Post will enlist other financial investors in relieve the investment burden. The 38-story building with the total floor area of 63,520 square meters, located in the newly developed Donaustadt (Danube City) district in the city’s northwest, is fifth highest in Austria. The building is currently occupied by major international tenants such as Ernst & Young, Oracle, and Borealis.
This is the second time for a Korean real estate fund to invest in Vienna properties. Late last year, IGIS Asset Management made an investment in the “Wien Mitte” shopping mall with funds from two domestic institutional investors.
An investment banker commented on the deal, “As the real estate prices in major western European cities like London and Paris are rising too fast too much, investors are now turning their attention to underappreciated locations like ones in Germany, Austria, and Switzerland. Comparing to other large cities, Vienna has fewer office buildings and thus command higher rental prices than elsewhere in Europe.”