JP Morgan has reached an agreement to dispose of Manhattan’s landmark 195 Broadway to a consortium led by Korea Investment & Securities and Samsung SRA Asset Management for KRW 600 billion ($500 million), according to the Korea Economic Daily.
JP Morgan is selling the former AT&T headquarters in Manhattan, where the first ever transatlantic telephone call was made in 1927, after acquiring a 95 percent share in the property on behalf of institutional investors in 2013 from US real estate company L&L Holding for a reported $500 million.
Under the terms of the proposed sale, the Korean asset managers are said to be picking up JP Morgan’s 95 percent share in the 29-storey office building, with L&L Holding retaining its 5 percent interest.
The 103-year-old building, which occupies a full block along Broadway, is roughly 90 percent leased to tenants including Omnicorn Media Group, Getty Images, and Gucci.
Based on the KRW 600 billion price tag, the purchase is said to offer a net initial yield of 5 percent.
Deal Supported by KRW 250B Fund
The report of the downtown Manhattan deal comes as Korea investors continue to ramp up their cross-border acquisitions following a record-breaking first half of the year that saw institutions from the North Asian country plough KRW 7 trillion into overseas property.
The Seoul-based asset managers will borrow KRW 350 billion from US financial institutions and raise KRW 250 billion from Korean individuals and institutions to fund the acquisition.
Of the KRW 250 billion, Samsung SRA has received commitments of KRW 50 from institutional investors, while the remaining KRW 200 billion will be raised by Korea Investment Management, an affiliate of Korea Investment & Securities, through to be launched in October for marketing to individual investors.
The open-ended fund is set to be one of the largest ever launched in South Korea for cross-border property investment, with the asset managers said to be adopting this route as institutional investors in South Korea lose their appetite for overseas real estate investments.
Korean Investors Make Shopping Trips to US, Europe
The purchase of 195 Broadway is the second big-ticket US deal in just over two weeks for Korean investors, coming fifteen days after Mirae Asset Global Investments agreed to buy 15 US hotels from Anbang Insurance Group for a reported $5.8 billion.
Mirae picked up the luxury hotel portfolio, which includes Essex House in Manhattan and the InterContinental hotel in Chicago, a year and a half after the insurer’s former chairman Wu Xiaohui was sentenced to 18 years for fraud and embezzlement.
While the US has benefited from Korean capital over the last 14 days, Investors from the North Asian nation have also shown an appetite for trophy assets in European centres over the past three months.
Just ten days ago, Hana Financial Investment, together with London-based asset manager AGC Equity Partners, was said to have entered into exclusive negotiations to purchase a 140,000 square metre office property in Frankfurt for KRW 1.3 trillion.
Three weeks ago, a consortium led by Korea’s Meritz Securities was said to be in exclusive negotiations to buy the Finance Towers in Brussels for €1.3 billion, according to sources cited by the Nikkei Asian Review.