Korean brokerage firm to buy Novartis campus in Paris for $454 mn: report

Sep 30, 2016 (Gmt+09:00)

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Korea Investment & Securities Co. Ltd. is set to buy an office building of Swiss pharmaceutical company Novartis under construction in Paris for 500 billion won ($454 million), and plans to sell down its stake in the property to other South Korean institutional investors, according to a South Korean news report.

For the acquisition, the fifth-largest brokerage company in South Korea by capital will invest 240 billion won of its own money and borrow 260 billion won from local financial institutions, online media edaily reported on Sept. 29, citing a source of the brokerage company. Korea Investment will complete the payment for the transaction on Sept. 30 and fine-tune the contract, before signing a definitive agreement early next month.

A Korea Investment & Securities source confirmed the transaction, but declined to give details on the value and the timetable for a final agreement, saying: “Discussions for the deal are still under way.”

novatis-campus-paris

The Novartis campus in Paris is set to be constructed in 2018, and leased to the Switzerland-based pharmaceutical company for 10 years. The eight-story building covers a floor space of 42,200 square meters, and consists of a business center, two restaurants, 200-seat auditorium, banquet hall and a cafeteria, according to the report.

By selling a stake in the building to other institutional investors, including pension and savings funds, Korea Investment & Securities expects to earn a 6~7% return a year. The securities company focuses on office buildings in European cities with steady demand and low borrowing costs of around 1%. In particular, it has been buying office buildings in Poland, Belgium and France.

The property deal adds to a series of South Korean brokerage houses’ acquisitions of overseas real estate assets, with an aim to sell their stake in the buildings to domestic investors to meet soaring demand for alternative investments.

South Korea’s NH Investment & Securities Co. Ltd. bought Woolworth headquarter in Sydney for $336 million early this year, and Kiwoom Securities Co. Ltd. acquired an office building in Dallas, KPMG Plaza. This month, Mirae Asset Global Investments Co. Ltd. raised the planned 300 billion won in a public fund to finance its acquisition of State Farm Insurance’s office building tower in Texas, after acquiring a hotel in Hawaii and Amazon’s headquarter building in Seattle.

By Chang Jae Yoo

yoocool@hankyung.com