South Korea’s Hyundai Marine & Fire Insurance Co. Ltd. will commit around 60 billion won and 70 billion won ($50~58 million) to a domestic real estate fund to buy an office tower of Allianz Group under construction in Berlin, in a deal worth 380 billion won ($317 million), local newspapers reported on Jan. 10.
With the planned investment, the South Korean insurer will become an anchor investor of the fund, through which South Korea’s Vestas Investment Management Co. Ltd. is aiming to raise about 160 billion won to finance the acquisition. The real estate fund targets an 8%-level annual return.
Vestas Investment was recently picked as the preferred buyer of the building which is set to be built by early 2019, according to the Maeil Business Newspaper. The investment firm will borrow loans for the rest of the acquisition cost and complete the purchase within the first quarter of this year.
Hyundai Marine has yet to determine specific terms and conditions on its investment, probably for a seven-year period, in the fund. It needs to win approval of its internal review committee, a meeting of which is scheduled for early March, MoneyToday reported.
Allianz Deutschland AG, a holding company, will lease the new tower for 15 years, moving from Treptowers. The office tower consists of three five-story buildings and covers 62,213 square meters. A German investment firm and a Swiss insurance company had put the property up for sale.
Investors in the Berlin office tower will receive interests before the building is built. After construction, the German insurance giant begins to pay rents and dividends will be paid to investors.
Such investments underlined the keen interest among Korean asset owners in Europe’s real estate market, particularly in Germany, France and Belgium, where vacancy rates in office buildings remain low and steady economic growth bolsters expectations of rent growth.
<Edited by Yeonhee Kim>