South Korea’s Teachers’ Pension will acquire an office building in Brisbane, Australia which the Brisbane city government has signed a contract to lease for 20 years, and invest about A$100 million ($75 million) in the deal worth 180 billion won ($153 million), the pension fund said on Jan. 19.
The Teachers’ Pension is planning to finance the balance of the acquisition price through loans in Australia, and expects the asset to deliver an annual return of around 8%, including dividend incomes. The deal has not closed yet.
The investment in the capital of the Australian state of Queensland comes as the pension fund is planning to expand real estate and infrastructure investment this year. The $12 billion retirement fund said it will also allocate capital to offshore private debt funds, but provided no further details.
Brisbane, the third most populous city in Australia, is attracting value-add buyers amid expectations that the government sector is expanding again. The city government had made heavy headcount cuts in the past few years after the mining boom ended.
One fifth of workers in Brisbane work for the public administration, compared to only 6% in Sydney, according to Knight Frank, a research firm. Education and tourism sectors also are major occupiers in the office market in the city which has a diversified economy. Knight Frank expects investment and occupier demand to pick up in Brisbane in 2017, as investors begin to embrace more risk and seek higher relative returns.
By Donghun Lee
<Edited by Yeonhee Kim>