Hana Financial Investment Co. Ltd. made a 130-million-euro ($147 million) acquisition in Prague’s office property market in June, just a few months after it completed a 210-billion-won purchase of office complex Rustonka Business Center in the city together with its affiliate asset manager.
The purchase of the Main Point Pankrac office building from developer Aceur Investment S.A. represented a net initial yield of 4.50%, according to DTZ Investors which arranged the acquisition.
Hana borrowed 60% of the acquisition price in a loan with a coupon rate of 1.40% per year.
Considering the financing cost, the acquisition is expected to deliver a cash-on-cash return of at least 7% per year to its equity investors, said DTZ Investors, part of Cushman & Wakefield, a US real estate services firm.
The 26,500-square-meter building, developed in 2018, is located in Prague’s Pankrac district. It is leased to McKinsey, Unipetrol and a subsidiary of BNP Paribas.
Driven by demand from IT companies and flexible workplace providers, the office vacancy rate on Prague’s office market came to 4.3% in the first quarter of this year, down 80 basis points from the last quarter of 2018, according to the Prague Research Forum.
The decreasing vacancy rate in the city of Czech Republic is fueling expectations for rental increase.
Hana Financial, the brokerage arm of South Korea’s leading banking group with an equity capital of $2.7 billion, has been emerging as an aggressive real estate investor in central and eastern Europe, expanding into France, Poland and the Netherlands.
It sells them down to domestic institutional investors and recently to individual investors.
By Hyunil Lee
<Edited by Yeonhee Kim>