Hana Asset Management Co. Ltd. plans to raise 117.5 billion won ($105 million) in a public fund from South Korean individual investors to fund its 350 billion won acquisition of DreamWorks Animation’s headquarters and studios campus in California.
The public fund offers annual returns of 6 to 7% for a five-year investment period, following Hana’s recent agreement to buy the five-building property from US investment firm Griffin Capital Corporation which bought the campus for $215 million in 2015.
Hana will receive investor commitments next week and borrow the rest of the acquisition cost from local institutions, according to industry sources on Nov. 7
The 460,000-square-foot property in Glendale, California is fully leased to DreamWorks Animation SKG Inc. with around 18 years of remaining lease term.
The public fund will hedge half of its currency exposure ahead of an expected interest rate rise in the US.
In March, Hana Asset raised 156.4 billion won from a public real estate fund to purchase the NASA headquarters building. It made its first dividend payout to investors in mid-October, after a delay in winning US regulatory approval for the transaction.
With loosened regulations on public funds and plenty of market liquidity, Hana sees high-net-worth individuals as a new source of capital for global investments. To boost public funding for cross-border investments, Hana Asset hired Moon-hyun Cha, a veteran retail banker, as chief executive last year.
Public funds charge higher management fees than private funds, given the complexity of fundraising from multiple individuals.
In Hana’s prior public funds for global property investments, individual investors had put hundreds of thousands of dollars on average, more than 10 times the minimum requirement level.
But tightened regulatory scrutiny over South Korean asset managers’ move to fund overseas investments with retail money forced some firms to drop a planned investment, with South Korean institutional investors remaining cautious about high valuations in US properties.
A consortium of KB Securities Co. Ltd. and IGIS Asset Management Co. Ltd. gave up a plan to buy a four-star hotel in Hawaii, Hyatt Centric Waikiki Beach, after South Korean regulators rejected a public fund launch for the investment.
In September, Hana Asset’s parent company Hana Financial Group, has agreed to buy a shopping center building and its surrounding land in Japan, in a deal worth around 50 billion won, with a view to reselling part of its equity interest to South Korean individuals.
By Daehun Kim
<Edited by Yeonhee Kim>