South Korea’s Public Officials Benefit Association (POBA), a local pension fund managing 10 trillion won ($9 billion) retirement fund for government officials, will acquire Brederode, office complex located in central Brussels, Belgium at 130 billion won, according to sources on Tuesday.

POBA, which was named as a preferred bidder recently, will purchase the Brederode complex worth 130 billion won by acquiring 100 percent stake in the office complex from a real estate investment trust (REIT), whose name is unknown, at around 74 billion won. The remaining 56 billion won will be financed through a loan from a local financial institution. The pension fund aims to get an annual return of around 5 percent from the deal over the next six years.

The investment will be made with a fund it created with IGIS Asset Management, a Seoul-based real estate private equity fund manager.

The Brederode is an office complex comprised of three 6-floor buildings with a total floor space of 22,300 square meters. It is located in the central business district of Belgium’s capital Brussels that it is close to the Belgian Royal Palace and Central Station. It is currently occupied by six companies including multinational law firm Linklaters LLP whose contract years on average span over 13 years. Given the low vacancy rate, the property will deliver stable returns from leases.

Since last year, the pension fund operator has actively engaged in overseas real estate investment projects for better returns and investment options amid the slow economy and low-interest environment at home. It has focused on real estate market in mainland Europe after the British vote to leave the European Union last year, said an unnamed POBA official, adding that it will concentrate investments on mid-sized office buildings worth between 100 billion won and 200 billion won that are less sensitive to market volatility.

By Kang Doo-soon and Song Gwang-sup

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