Korea Investment Corporation (KIC) has secured 37 million pounds ($48 million) in proceeds from the recent 107 million-pound sale of a London office building opposite the Bank of England, which marked its first exit of directly-invested overseas property.
The sovereign wealth fund sold the building at One Bartholomew Lane to London-based Pembrey Asset Management Ltd. which reportedly represented a South African investor for the deal.
Taking into account rent incomes and recapitalization, the seven-year investment in the 80,000-square-feet block yielded an IRR of close to 10%, according to sources on Jan. 22.
The sale price translates into a 53% return on the initial investment.
Back in 2012, KIC bought the office property for 70 million pounds in its first direct investment in overseas property markets. Previously, it had made indirect investments in real estates through funds.
Last year, KIC put the property on the market, while other South Korean institutional investors were snapping up London office buildings.
“Apart from the long investment period of seven years, it seems that KIC, unlike other domestic institutional investors, saw little chance of a shatp price rise in London office buildings because of the Brexit impact,” one of the sources told the Korean Investors.
In 2018, the National Pension Service, the world’s third-largest pension scheme, acquired Goldman Sachs’ new European headquarters under construction in London, worth 1 billion to 1.5 billion pounds, in its single biggest global property investment.
Other acquisitions of London office buildings last year included the 242-million-pound deal on Cannon Bridge House by a consortium of Mirae Asset Daewoo Co. Ltd. and NH Investment & Securities Co. Ltd.; and the 340-million-pound purchase of 20 Old Bailey by Mirae Asset Financial Group.
KIC will continue to lease part of the block which also houses Agricultural Bank of China.
By Chang Jae Yoo
<Edited by Yeonhee Kim>