Korea Investment Management Co. will launch a real estate fund investing in buildings used as headquarters of Belgium’s foreign ministry to provide more diverse investment choices for its customers.
The South Korean asset management firm said Monday its new real estate fund will invest in Egmont I and Egmont II, two office buildings located in Brussels’ Central Business District. They were built in 1997 and 2007, respectively, to house the Belgian Ministry of Foreign Affairs. The remaining lease term is 13 years.
The Belgium real estate fund will pool assets from Mar. 14 to 21 and start trading on Mar. 22. It would operate for five years but aims to meet its targeted goal in three years as it would start selling the assets two and a half years after its launch. Dividends would be paid out twice a year. The minimum investment is set at 5 million won ($4,697).
Brussels’ office real estate market is considered a more stable yet profitable investment option than other major European cities. The vacancy rate in the city’s business district is less than 1 percent, considerably lower than Korea’s 10 percent, and the lease has been rising at an annual average of 1.9 percent since 2004, according to the company.
“There have not been many investment opportunities in European real estate for Korean investors,” said an official from Korea Investment Management. “The relatively low vacancy rate of Belgium’s office market makes it an appealing investment.”
This would be the first overseas real estate fund in Korea to offer full currency hedging on the principal. The returns would also be 60-80 percent hedged for stable management.
Korea Investment Management is expanding investment in European properties in a move to seek higher and stable yields. Last month, it acquired a 99-year leasehold on Egmont I and Egmont II for 370 million euros ($455.9 million), with total costs nearing 400 million euros when including advisory fees and other transactions. It aims to raise 164 euros from the proposed fund and borrow the remaining 230 million euros.
By Hong Jang-won and Kim Hyo-jin
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