Korea Investment to buy 99-yr ownership of Brussels building

  • 2019-06-11

Korea Investment Management Co. will acquire a 99-year ownership of an office building in Brussels for 146 million euros ($165 million) in its second such investment in the capital of Belgium.

AXA Belgium is selling the long-term ownership of Le Toison d’Or which is mainly leased to Regie Des Batiments (RDB), a Belgian government agency for real estate management, until the end of 2030, Korea Investment said in a regulatory filing last week.

RDB accounts for 99.8% of rents of the 31,000-square-meter building.

To fund the transaction, Korea Investment plans to raise 68 million euros ($76 million) from domestic institutional and individual investors between June 10-14, and borrow 87.6 million euros in a five-year loan.

The deal, sourced by its affiliate Korea Investment & Securities Co. Ltd., costs 156 million euros, including fees and other expenses, according to the company filing. It is expected to close on June 26.

It comes after Korea Investment Management raised 164 million euros from South Korea investors in March 2018 to buy a 99-year ownership of two Brussels buildings for 370 million euros.

For a long-term ownership acquisition, the buyer pays a purchase tax of just 2%, compared with 12.5% for a property acquisition, according to edaily, a South Korean news provider.

Since 2017, Korea Investment has raised a total of 330 billion won through domestic funds to finance overseas real estate investments ranging from Belgium to Milan and Tokyo.

They were fully subscribed within a few days, luring individual investors with higher target returns than other investment funds.

For the new Belgium property investment fund, it charges 1.16% as fees, including management fees it will pay to a foreign property manager of the Brussels building.

It is 13 basis points more than that for last year’s public fund launched for two Brussels buildings, according to a MoneyToday report.

Separately, Korea Investment is seeking to raise 62 billion won from domestic individual and institutional to acquire a Tokyo office building.

<Edited by Yeonhee Kim>

(Photo: Getty Images Bank)