A consortium of Samsung Securities Co. Ltd. and Hanwha Investment & Securities Co. Ltd. is likely to invest 340 billion won ($299 million) in a Paris office building to acquire the property jointly with a French investment company for around 1.5 trillion won ($1.3 billion).
The South Korean consortium was recently named as the preferred buyer for an equity interest in Lumiere building, or half of the 700 billion won which France-based Primonial REIM will invest in the property, according to investment banking sources on April 4.
Samsung and Hanwha will acquire 170 billion won each of the equity interest for resale to domestic institutional investors, targeting an annual return of between 6% and 7% for seven years.
They will use a vehicle of Samsung SRA Asset Management Co. Ltd. for the investment.
Primonial REIM will borrow around 800 billion to finance the purchase of the building which has a rentable space of 136,567 square meters.
Completed in 1992, the largest private office building in Paris is located in the 12th district of Paris, part of the eastern business district of Paris.
Anchor tenants include the Ministry of the Interior, the French national railway company and other government institutions, with a vacancy rate of 2%.
South Korean brokerage firms and investment companies have been piling into the French office market in partnership with local asset managers, fueling competition for landmark buildings including Tour Majunga.
Primonial REIM had 17.2 billion euros of assets under management as of January, 2019.
By Daehun Kim
<Edited by Yeonhee Kim>
(Photo: Getty Images Bank)