South Korea’s biggest institutional investor National Pension Service (NPS) is selling Sony Center in Berlin, Germany whose value has nearly doubled to 1.1 billion euros ($1.3 billion) from its original purchase price seven years ago.
According to the investment banking industry on Tuesday, NPS recently invited a select group of global institutional investors to a competitive bidding. It was reported that bidders included the world’s biggest asset manager Blackstone, the Canadian real estate investor Oxford Properties Group, Hong Kong’s property developer Wheelock Properties, Kuwait’s sovereign wealth fund Kuwait Investment Authority, and U.S. real estate company RFR Holding. NPS plans to name the preferred bidder by the end of this month and complete the deal within the year.
The company’s decision to sell off the landmark building in Berlin comes after the building’s property value is estimated to have climbed to 1.1 billion euros, nearly twice of 586 million euros that NPS paid to Morgan Stanley for the building in 2010. The Korean pension fund, which is also the world’s third largest pension fund with 577 trillion won ($513.8 billion) assets under management, is expected to see returns including dividends of more than 700 billion won from the sale of Sony Center.
“NPS appears to have decided to sell the center on the grounds that it reached its target returns,” said an unnamed person familiar with NPS. The decision also is timed with the recovery of the European commercial property market since the 2008 global financial crisis.
Assets in German cities, including Berlin and Frankfurt, have emerged as alternatives to London following Britain’s vote to leave the European Union last year.
When the deal is completed, NPS would see a boost in its overall return on investment, which stood at 4.8 percent last year. By sector, the return from investing in foreign stocks was 10.6 percent, followed by alternative investments 9.9 percent, domestic stocks 5.6 percent, and foreign bonds 4.1 percent.
Sony Center is a massive building complex located at the Potsdamer Platz in Berlin, initially built as the European headquarters of Japan’s Sony Corp. It consists of eight buildings with a total floor area of 130,000 square meters and is currently occupied by Deutsche Bahn and Facebook, among others. The center, which also houses hotels and movie theaters, is the home of the Berlin International Film Festival that takes place every February.
By Song Gwang-sup
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