Korea’s first Australia property fund for retail investors raises $125 mn

  • 2017-03-20

Mirae Asset Global Investments Co. Ltd. has raised 141 billion won ($125 million) as planned from a domestic public fund launched to finance its $245 million acquisition of an office building in Canberra.

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The fund, closed on March 16, is South Korea’s first public real estate fund aimed at Australian property. It comes on the heels of funds unveiled for retail investors to invest in US and European real estate, as domestic investors set their eyes on Australian real estate, encouraged by the weakened Australian dollar.

Mirae Asset launched the real estate fund, offering an expected annual return of over 5%, to sell down part of its interest in a 12-story office building in Canberra, according to investment banking sources on March 17.

The South Korean investment firm bought the property in the central business district of Civic for A$320 million ($245 million) earlier this year. The building at 50 Marcus Clarke Street is fully leased to Australian government’s Department of Education, Employment and Workplace Relations (DEEWR).

DEEWR is to continue to lease the building through May 2025, which can be extended for another five years.

The real estate fund boasted of the long-term tenant, DEEWR, and the escalation clauses on the lease contract under which rents are supposed to increase by 3.35% a year.

“With this successful fundraising of the public product, asset managers and brokerage companies will increasingly arrange real estate investments in Australia,” said one of investment banking sources.

South Korean institutional investors began investing in Australian office buildings in 2015, including the 207-billion-won acquisition of a building in Canberra leased to a federal government agency by a group of pension and savings funds.

The latest investment is the 177-billion-won purchase of the Green Square office building in Australia, leased to Brisbane City Council, by Korea Teachers’ Pension at in January.

The closed-end fund is not currency hedged, betting on a rebound in the Australian dollar, said a Mirae Asset source.

The fund will expire in five and a half years. It will be listed on the Korea Stock Exchange within 90 days of the launch.

Last September Mirae Asset launched the country’s first public fund investing in US real estate and raised the planned 300 billion won to fund its 900-billion-won acquisition of State Farm Insurance’s office complex in Texas.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>