South Korean financial institutions, including Hana Financial Investment Co. Ltd. and KDB Life Insurance Co. Ltd., have invested $96.4 million in AT&T headquarters building in Dallas by acquiring a majority stake in a limited partner which owns the property.
Under the transaction, they took preferred shares in the unidentified limited partner (LP) to secure an 80% interest in the 37-story building, according to sources with knowledge of the matter on Sept. 19.
The LP holds the remaining 20% stake that consists only of common shares, after the stake sale.
For Korean institutions, this investment differs from a typical transaction for cross-border real estate which is conducted in a way that the buyer acquires beneficiary of certificates on a property issued by the selling asset management company.
It is expected to deliver an annualized 6% return after currency hedging.
When the property is sold in the future, the Korean investors will take a limited portion of capital gains, while the common shareholders pocket the majority.
This year, telecom giant AT&T signed a 13-year lease agreement on the 89,725-square-meter building located in its office campus in downtown Dallas, with a 20-year extension option.
AT&T is spending $100 million to revamp the Dallas headquarters complex, which includes a redevelopment of its four office buildings and adding high-tech public spaces, restaurants and retail stores.
IGIS Asset Management Co. Ltd., South Korea’s largest real estate investment firm, sourced the property deal after winning an auction which started in March.
It teamed up with Hana Financial Investment for the auction.
“We made an aggressive bidding, betting on the growth potential for the Dallas area which is undervalued compared with big city downtowns New York and LA,” an IGIS source told the Korean Investors.
By Hyun-il Lee
<Edited by Yeonhee Kim>