Korea public officials fund set to buy Belgium building for $117 mn

The Public Officials Benefit Association (POBA) has been recently named as a preferred buyer of an office complex in Brussels, Belgium, in a 130 billion won ($117 million) deal which is expected to offer an annual return of around 5%.

POBA, a $8 billion savings fund for South Korean government employees, will invest about 74 billion won to acquire the entire equity stakes in the property, Brederode, from an unidentified real estate investment trust firm, according to a POBA source on March 29. The remainder, or about 56 billion won, will be borrowed from local financial institutions.

The equity investment for a six-year investment period is to be made through POBA’s 250 billion won Europe real estate investment fund set up last year. Its first acquisition was an office building in Hamburg, Germany at 120 billion won last year, which is leased to insurance group AXA and four other tenants.

The blind-pool fund targets mid-sized core office buildings in major European countries, worth 100 billion won to 200 billion won apiece, which are seen less sensitive to economic cycles. The separate account fund, in which POBA is the sole limited partner, is managed by a consortium of South Korea’s IGIS Asset Management Co. Ltd. and CBRE Global Investors.

POBA is aiming to close the acquisition of Brederode by the end of this month.

The office complex in central Brussels has a total floor space of 22,300 square meters and consists of three six-story buildings.

Its tenants include Linklaters LLP, a multinational law firm and five other companies, with over 13 years left on their lease on average.

By Donghun Lee

leedh@hankyung.com

photo = Getty Images Bank