A South Korean-led consortium is said to have completed its purchase of the Finance Tower in Brussels, notching the highest value purchase ever of a single property in Belgium, according to an account in the Korea Economic Daily.
The Meritz Securities-led group, which was previously reported by Bloomberg to also include London-based property investment manager The Valesco Group and Seoul-based AIP Asset Management, is said to have paid Dutch asset manager Breevast BV €1.4 billion ($1.6 billion) for the 36-storey office tower.
The completion of the acquisition brings the tally of cross-border purchases by South Korean players in 2019 to around $19 billion, more than doubling the country’s former record of $9.6 billion set in 2017, according to property information provider Real Capital Analytics.
Gaining an Asset in Brussels’ CBD
Located in Brussels’ financial district in the northern quarter of the city, the 1983-vintage building is Belgium’s second tallest building and has the largest amount of floor space of any office property in the country.
Based on the Finance Tower’s net leasable area of 220,000 square metres (2.4 million square feet), the Korean consortium is paying €6,363 per square metre for the 145-metre-tall structure. With the purchase of the office block the Meritz-led group is also gaining a steady tenant, with the entirety of the property leased to the Belgian government until 2034 on an annual passing rent of €60 million a year.
Breevast BV is selling the building three years after two government officials were convicted for misconduct related to the Dutch asset manager’s acquisition of the building eighteen years ago.
Selling Off a Controversial Asset
Helmed by real estate tycoon Frank Zweegers, who was arrested last year on a bribery charge relating to one of the company’s other properties, the Dutch asset manager paid €311 million for the Finance Tower before investing a further €300 million in renovations that were carried out between 2005 and 2008.
The property magnate, who despite being the subject of a police investigation, has not been charged with any crimes relating to his company’s Finance Centre dealings, is reported by the Belgian press to have taken out loans worth €500 million against the property.
Zweegers, who has been trying to offload the asset for several years, has tangled with Dutch tax authorities over the building, and had looked into securitising the asset in 2011.
Korean Consortium Explores Financing Options
To finance the controversial asset, Meritz is reported to be looking at options including creating a new REIT based on the Finance Tower, and a sell-down of equity in the building to Korean pension funds, as well as looking into the possibility of raising $1 billion in senior debt, according to the Korea Economic Daily.
The deal for the Brussels asset is not the first trip overseas for the Meritz-led group, with the same consortium having paid £100 million ($132 million) last year to purchase Microsoft’s UK headquarters in Reading from UK-based Solutus and F1 Real Estate Management.
That UK deal, along with the Meritz group’s Brussels buy are part of a growing wave of overseas acquisitions by South Korean investors, with this latest transaction coming after institutions from the north Asian nation spent €6.2 billion buying foreign properties in the first six months of 2019, according to Savills.
Just last month, Hana Financial Investment completed the acquisition of The Squaire, a 140,000 square metre in Frankfurt, from Blackstone for KRW 1.3 trillion ($1.1 billion), according to the Korea Economic Daily.
Four months before that German transaction, investors including Hana Financial Investment had acquired the Hilton Parkview hotel in Vienna for €370 million.
That acquisition of the 571 room property, which is the largest hotel in Austria and the third-largest Hilton hotel in Europe, came just a month after a Mirae Asset Daewoo-fronted consortium acquired the Majunga Tower in Paris for KRW 1.08 trillion.