A consortium of Samsung Group’s financial units has moved a step closer to buying Commerzbank Tower in Frankfurt, Germany after it was given the priority to negotiate the acquisition deal of the country’s tallest landmark building that is worth at about 900 billion won ($818.1 million).

According to multiple sources from the investment bank industry on Thursday, the consortium led by Samsung SRA Asset Management Co. was recently selected by Commerzbank Group as the preferred bidder to buy Commerzbank Tower, beating other strong contestants such as the Government of Singapore Investment Corporation (GIC) and Korea Investment & Securities Co. The purchase price is expected to be about 900 billion won. The consortium consists of Samsung Life Insurance Co., Samsung Fire & Marine Insurance Co., Samsung Securities Co. and Samsung SRA Asset Management.

Samsung SRA Asset Management, a wholly-owned subsidiary of Samsung Life Insurance, plans to arrange funds for the payment through a real estate blind fund created jointly with Samsung financial arms such as Samsung Fire & Marine Insurance in June last year, as well as other sources. A blind fund does not have a set investment target or goal for the funds raised by investors. Earlier, Samsung’s financial units purchased the BMO Harris Bank building in Chicago and the So Ouest office tower in Paris through the 500 billion won worth blind fund.

An unnamed investment bank official familiar with the recent deal said the consortium plans to cover half of the total purchase cost through the blind fund left with a balance of about 150 billion won and additional investment from Samsung Group financial arms - most likely Samsung Securities. The remaining will likely be financed through loans from local financial institutions, the official added.

The 56-story Commerzbank Tower, which was built in 1997, is considered the so-called trophy asset or a symbolic property representing Germany. The 121,000-square-meter tower is 259 meters high, and it was the tallest building in Europe until the 264 meter luxury residential and commercial building Triumph Palace was built in Moscow in 2006. Commerzbank Tower is currently used as the headquarters of Commerzbank, the second-largest bank in Germany that acquired a stake in KEB during the Asian financial crisis in 1998.

An unnamed official from the real estate investment industry said the latest deal is meaningful, because not only will Korean companies buy the head office building of the foreign bank that rescued the local bank nearly two decades ago, but they are also about to buy the landmark building that represents Germany, Europe’s major economy. The deal is expected to serve as a momentum for other Korean institutional investors to solidify their position in the overseas real estate market, the official added.

By Kang Doo-soon, Song Gwang-sup

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