Mirae Asset building [Courtesy of Mirae Asset]
Mirae Asset Global Investments Co. has been tapped as the preferred bidder to buy a real estate investment trust listed in Singapore, a move that will help the South Korean asset management company expand its overseas presence.
According to multiple sources from the investment bank industry on Tuesday, Mirae Asset has been selected as the preferred bidder for the acquisition of Manulife US Real Estate Management Pte., beating four to five other candidates in the race.
“Mirae Asset was picked as the preferred bidder on a term that it will buy the REIT manager for roughly 200 billion won ($153.6 million) and purchase part of a stake in the REIT,” said an unnamed industry official.
Manulife US Real Estate is a REIT management company affiliated with Manufacturers Life Insurance Co. in Canada and manages Manulife US Real Estate Trust listed on the Singapore Exchange. The REIT is the first of its kind that joined the SGX among trusts that invest in office buildings in the U.S. and the first office trust in Asia listed with U.S. assets only.
The portfolio includes 12 office buildings located across the U.S. in Georgia, New Jersey, Washington D.C. and California. The REIT’s asset under management reached $1.9 billion at the end of December last year and market cap was $530 million.
Mirae Asset has been engaged actively in global merger and acquisitions for growth.
In 2018, Mirae Asset acquired Global X, a U.S. exchange traded fund issuer and in 2022, ETF Securities, an Australian ETF management firm. The AUM of Global X reached 45 trillion won at the end of December last year, up from 8 trillion won in 2018.
Market insiders note that the latest acquisition of a REIT manager in Singapore is part of a global growth strategy of Mirae Asset. The move is expected to allow the South Korean company to have stable operations in Singapore that has grown into a REIT hub based on a transparent financial system and government support.
They also note that Mirae Asset will expand management and capacity of REITs that are highly stable, along with high-growth ETFs, and have them contribute to future growth.
According to the Korea Association of Real Estate Investment Trust on Tuesday, about 40 REITs are listed in Singapore after it adopted the investment scheme in 2002. Their total market capitalization is 100 trillion won and they delivered a dividend yield ratio of 7.7 percent at the end of September last year, higher than those in the U.S., Canada, Australia and Japan.
A 2021 report by the Korea Capital Market Institute showed that Singapore has grown into a hub of the global REIT market based on aggressive government policies and overseas asset incorporation despite the small scale of the commercial real estate sector.
A photo celebrating the listing of the Global X Cloud ETF on the Nasdaq billboard in Times Square in New York, in April 2019. [Photo provided by Mirae Asset]
The top five REITs in the Singapore market are sponsored by the city state investor.
“The REIT market in Singapore boasts high reliability and safety,” said an unnamed official from an asset management firm. “Many REITs that invest in properties not only in Singapore but also in the U.S., China and Japan are listed.”
Mirae Asset was the first Korean manager to list an ETF in Hong Kong in 2011 as part of its global drive after establishing an entity there in 2003. It also acquired Horizons ETFs in Canada in the same year for 143 billion won to expand its global presence.
Mirae Asset bought Global X for about 520 billion won in 2018 to join the U.S. ETF market where 70 percent of the ETFs in the world are listed.
The market was skeptical at first when Mirae Asset began to go overseas on lack of experience and concerns about the performance of its investments.
Mirae Asset founder and Chairman Park Hyeon-joo, however, was firm about the company’s global entry. The management company set up a Hong Kong entity in 2003 and expanded its networks to India, the U.K., the U.S. and Brazil.
Mirae Asset launched its first fund in India in 2008. Now, there are 5.5 million retail accounts and it has 20 trillion won AUM to rank as the ninth-largest asset manager in the Asian country.
The total AUM of Mirae Asset stands at 248 trillion won as of the end of 2022, of which 40 percent is managed overseas. The overseas entities of Mirae Asset posted a combined net profit of 74.7 billion won as of September last year, which is 30 percent of its entire net profit of 238.8 billion won.
Last year, Mirae Asset and Global X acquired Australia’s ETF Securities, becoming the first case where a Korean manager purchased an overseas ETF manager with profits raised from overseas.
By Kang Doo-soon, Won Ho-sup, and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]