Kyobo Life Insurance Co. Ltd. and other South Korean institutions have invested 100 billion won ($87 million) in mezzanine debts backed by an Amazon-occupied office building in Seattle for an expected return of between 4% and 4.5% a year.
The US online commerce giant leases the 12-story Urban Union in Seattle’s South Lake Union for a 15-year contract from this year. The building, opened in 2016, is about a block from Amazon’s headquarters.
The mezzanine tranche is part of the 300 billion won raised for the property, valued at about 400 billion won, according to investment banking sources on March 13.
French bank Natixis arranged the financing, after two New York-based investment firms – Tristar Capital and RFR Holding – bought the building for $269 million in January. The deal was reportedly one of the priciest sales in Seattle.
The investment by domestic institutions, including 45 billion won from Kyobo Life, was made through a five-year real estate fund raised by South Korea’s Hangang Asset Management Co.
Hanwha General Insurance Co. Ltd. and South Korea’s National Agricultural Cooperative Federation also participated in the mezzanine financing.
Separately, other South Korean institutional investors have decided to invest $83 million in mezzanine debts secured by an Apple-leased office complex in Silicon Valley, just after Tristar Capital acquired the property for $290.7 million.
“Based on our calculation of risk-adjusted rates of return, Europe’s real estate market is highly attractive this year,” said a source of Hangang Asset. “We will focus on mezzanine loans for the US (real estate), and equity investments in Germany and France.”
By JiHoon Lee
<Eidited by Yeonhee Kim>