South Korean real estate asset manager IGIS Asset Management Company will provide about $240 million in senior financing to real estate developer Douglas Development Corporation, according to PDI sources.
The senior loan is backed by a 10-story Class A office building in Washington D.C. It carries an interest rate of 4.45 percent at a loan-to-value (LTV) ratio of 65 percent. IGIS raised the capital from South Korean life and non-life insurance companies.
The 110-year old building is located in an office district in the east end of Washington D.C. covering a floor area of 42,975 square meters. It was extended and renovated in 1999 and between 2003 and 2005. A metro centre station is built on the underground of the building with three lines intersecting.
The property is currently 99 percent occupied with a historical occupancy rate of 94.2 percent. The Federal Bureau of Investigation is and will remain as the biggest tenant of the property, occupying 40 percent of the building’s space until November 2025. Other tenants include clothing stores such as Forever 21, Zara and H&M.
The investment is seen as a good match for IGIS’s investors which are mostly insurance companies and have relatively long investment horizons. The borrower was happy to lock in a financing cost for the long term at a fixed rate, sources close to the matter told PDI.
Korean investors are actively looking for real estate debt investments outside Asia. Most recently, Samsung SRA Asset Management and Korea Post Savings added overseas real estate debt into their portfolios.