IGIS plans to sell $130m US RE debt

The Korean firm is tapping local insurance companies for a real estate mezzanine debt sale relating to an office building in New York.

South Korean real estate asset manager IGIS Asset Management Company is selling about 150 billion won ($130 million; €12.3 million) mezzanine loan secured by a Manhattan office building, according to Korea Economic Daily.

The loan will be used to refinance an 11-story building at 85 10th Avenue in Chelsea, New York. It offers an annual return of four percent with a five-to-six-year term.

The 103-year old building is owned by real estate investment trust Vornado Realty Trust and a related real estate company. It is located near the West Side Highway and the High Line. Most of the office space in the building has been leased to Google since 2014 in a long-term contract to support the global company’s expansion.

“It is attractive because it is a prime office building located in the spotlighted area in Manhattan and leased to a global company in a long-term contract,” an investment banking source told the local press. “The investment satisfies the appetite of domestic insurance companies which focus on a steady stream of income, rather than capital gains from a sale.”

IGIS is approaching five to six South Korean insurance companies for the sale and the deal is expected to close in the second half of December. The firm is also conducting due diligence on the property in New York at the moment.

Earlier this month, the asset manager was reported to have provided about $240 million in senior financing to real estate developer Douglas Development Corporation secured by an office building in Washington D.C.

IGIS is a Korean real estate asset management company established in 2010, which had around $10.5 billion of assets under management by the end of June 2016. The company has raised more than $4.5 billion of equity from local and global institutions to date.