Korean savings fund and insurer to buy college building in Sydney at $56 mn

  • 2017-08-15

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The Construction Workers Mutual Aid Association (CWMAA) will acquire a language center building of the University of New South Wales (UNSW) in Sydney for A$71 million ($56 million), jointly with a South Korean insurance company.

CWMAA, with $2.8 billion in assets under management, will commit around 25 billion won ($22 million) to buy an equity stake in the property, according to investment banking sources on August 14.

The unidentified insurer will invest an additional 5 billion won as an equity investor for an expected annual return of around 8% for five years.

They will invest through a real estate fund that South Korea’s Pacific Investment Management Co. will launch and manage. The fund will borrow the rest of the acquisition price.

The UNSW Institute of Languages building on the Kensington campus has been used as a language center for foreign students since it was built in 2005. UNSW will lease it back for the next 15 years.

It is about 7 km away from Sydney’s central business district (CBD). But the Kensington campus of UNSW is expected to have access to the light rail networks which reach Sydney’s CBD from 2019, which boosted its attractiveness to the South Korean buyers.

“Australian properties have stable leasing terms and guarantee a rent increase in line with inflation under an escalation clause, so they are safe-haven investments for institutional investors,” a real estate source told the Korean Investors.

In May, two unidentified South Korean institutional investors completed a $54 million acquisition of a government-leased office building in Canberra.

Earlier this year, South Korean Teachers’ Pension had agreed to buy a city government-leased building in Brisbane in a deal worth $153 million. The investment was expected to deliver annual returns of around 8%.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>