Mirae Asset in bidding for $300 mn Charles Schwab’s US building: report

  • 2016-12-16

Mirae Asset Financial Group has recently submitted a letter of intent to buy a prime office building worth $300 million in San Francisco which financial services company Charles Schwab occupies as its headquarters, a South Korean newspaper reported on Dec. 15.

Mirae Asset, a top mutual fund manager in South Korea, plans to raise a private equity fund together with its brokerage and insurance units to fund the possible acquisition, the Maeil Business Newspaper said, citing investment banking sources.

“After passing the first round of bidding, Mirae Asset is now preparing for the second round of bidding,” one of the IB sources was quoted as saying. “Because it is a large office building located in a hub city with a prime tenant, Mirae Asset is putting every effort to acquire it.”

If the South Korean asset management firm clinches the deal, its cumulative real estate investments in the United States would come close to 3 trillion won ($2.5 billion) in 2016.

Built in 1973, the 17-story building is located at 211 Main Street in downtown San Francisco. The lease contract with Charles Schwab is set to expire in May 2018. According to a U.S. media report in July, the U.S. brokerage and banking company had said it wanted to stay in the 434,929 square-foot building.

The steady growth and low vacancy rate in San Francisco’s real estate market have spurred interest in the office building. In the San Francisco Bay Area, office demand has increased for tech companies, pushing rental incomes up sharply.

“In U.S. property markets, New York and San Francisco are the most attractive cities because they have strong growth engines such as Silicon Valley,” a South Korean asset management source told the Maeil. “Unlike Chicago and Houston, their real estate values are likely to remain stable.”

Mirae Asset, alternative assets of which are nearly 10 trillion won, has invested a total of 2.6 trillion won in U.S. real estate so far this year, including the Amazon head office building in Seattle and the State Farm Insurance’s office complex in Texas.

<Edited by Yeonhee Kim>