South Korea’s Mirae Asset Global Investments Co. is launching a novel type of real estate private equity fund (PEF) to domestic investors after buying high-rises in Dallas, guaranteeing annual return of more than 6 percent for the next seven years.

According to the investment banking industry Thursday, Mirae Asset Global Investments inked a memorandum of understanding (MoU) with Dallas-based KDC to acquire four State Farm office buildings at CityLine office location in Texas from the U.S. real estate company. The complex of 211,200 square meters is the largest office building compound in Dallas. The acquisition price will be about $850 million (about 950 billion won). The Korean firm will sign the final deal after completing due diligence early next month. The office hub, completed late last year, has been rented out to State Farm Mutual Automobile Insurance Company on a 21-year master lease. The long-term lease will help to bring in annual return of more than 6 percent.

Mirae Asset Global Investments plans to own the complex by borrowing 550 billion won from U.S. institutions and another 400 billion through stake in the property. Of the 400 billion, half will be packaged into a PEF to be sold to retail investors starting this month via counters at KDB Daewoo Securities Co. and Mirae Asset Securities Co. The closed fund with seven-year maturity will be listed on the Korea Exchange. The return on investment per annum would reach 6 percent excluding sales and operation fees.

Once the acquisition is complete, the Korean firm’s cumulative overseas investment fund would reach 6.5 trillion won. About 3.5 trillion won among the investment had been made this year. The company believes U.S. alternative assets pose as attractive investment as U.S. interest rates are poised to go higher.

By Choi Jae-won and Kim Hye-soon

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