Korea Post’s savings arm has been chosen as the preferred buyer of the headquarters building of France’s Natixis in Paris, in a deal worth 230 billion won ($206 million) that is expected to deliver about a 6% annual return, investment banking sources said on August 31.
The savings unit of the postal service agency, which manages 62.5 trillion won in assets, will shell out around 92 billion won for the purchase, or 40% of the total cost of the acquisition. The balance will be funded by loans from local financial institutions in France.
The complex, consisting of three buildings, is occupied by Natixis, the corporate and investment banking arm of France’s Groupe BPCE, in a lease contract which will last for the next 10 years. Located on Boulevard Montmarte, the heartland of Paris, the eight-storey building with three underground floors has a leasable area of 9,600 square meters.
“The building is located in a core district of Paris and is in a long-term lease contract with Natixis, a blue chip tenant. It seems that Korea Post has decided the investment on expectations for stable incomes,” the Maeil Business Newspaper cited an unnamed IB source as saying.
The prospective purchase may indicate a revival of interest in European assets. The European property market is restoring investor confidence gradually in the wake of the Brexit vote, led by neighboring countries of Britain, particularly France and Germany, the daily added.
Last June, Korea Post announced its acquisition of a 47% stake for about $250 million in the 12-storey office building in New York leased by online retailer Amazon. At the time, a Korea Post source told the Korea Economic Daily that it would shift its sights away from North America, where office building prices had soared, onto Europe.
Meanwhile, the savings unit of Korea Post issued a request for proposals last week to select three global real estate fund managers for $450 million investments in first mortgages of U.S. commercial assets.
<Edited by Yeonhee Kim>