Two South Korean institutional investors have recently completed a 60 billion won ($54 million) acquisition of an office building in Canberra which the Australian capital city’s health department started to lease this year on a 15-year contract.
They bought the property from Quintessential Equity, an Australian real estate developer, via a five-year fund of South Korea’s Hangang Asset Management Co. Ltd., according to investment banking sources on May 29.
The two institutional investors, including a savings fund, committed 28 billion won in aggregate for the deal, and borrowed the rest.
The office building on 2-6 Bowes Street in the Woden Town Centre has 12,376-square-meter rentable space.
Canberra’s Department of Health occupies about 90% of the small-sized building which is reportedly fully leased.
Rents paid to Hangang Asset, founded last year, will go up by 3.5% per year. The cap rate, or expected rental incomes divided by the property’s asset value, is 6.5%.
Australia’s office market becomes a niche for South Korean asset owners searching for an alternative to high-priced US and European real estate.
Hangang Asset had arranged a 100 billion won investment in mezzanine debt backed by an Amazon-occupied building in Seattle.
By Daehun Kim
<Edited by Yeonhee Kim>