Hangang Asset Acquires Ottawa Amazon Logistics Center for 546 Billion KRW

Private Equity Fund Raised Securing 70% Stake
20-Year Master Lease Contract... Stable Annual 7% Return Expected
Kiwoom Securities Plans to Sell Fund Beneficiary Certificates to Institutional Investors After Acquisition

The exterior view of the Amazon Fulfillment Center in Ottawa, Canada, which Hangang Asset Management successfully acquired for the first time in Korea

[Asia Economy Reporter Lim Jeong-su] Hangang Asset Management, a specialized alternative investment asset management company, has made the first-ever purchase of an Amazon fulfillment center located near Ottawa, the capital of Canada. The total investment amounts to 546 billion KRW, with Hangang Asset Management holding a 70% stake.

According to the financial investment industry on the 10th, Hangang Asset Management, together with Kiwoom Securities, is expected to complete the acquisition of the Amazon fulfillment center near Ottawa. This logistics center is a five-story building with a leased area of 82,000 pyeong (approximately 270,000 square meters) and was completed in August last year.

Amazon, the world's largest e-commerce company, signed a contract in September last year to lease this logistics center for a long term of 20 years (master lease). A source involved in the transaction explained, "Amazon holds the right to renew the contract for up to 20 years, which will generate stable and long-term returns of over 7% annually."

Hangang Asset Management conducted this investment through a multilateral joint venture (JV) with three local institutions: Crestpoint, a Canadian real estate specialized asset management company; Broccolini, Amazon’s key development partner in Canada; and a Canadian pension fund. The logistics center’s equity is held 30% by local institutions and 70% by the fund raised by Hangang Asset Management. Kiwoom Securities will invest by purchasing beneficiary certificates of the fund.

Hangang Asset Management anticipates that this investment will attract significant industry attention as it represents the first Canadian logistics real estate investment by a domestic institution and the first JV investment with local institutions. A representative of Hangang Asset Management stated, "The acquisition of a large-scale logistics center in Canada will serve as a stepping stone to establish ourselves as a major player in the North American real estate market," adding, "We plan to accelerate real asset and loan investments to provide domestic institutions with diversified overseas investment opportunities and differentiated returns."

This investment will increase Hangang Asset Management’s total assets under management (AUM) to approximately 4 trillion KRW. Previously, on the 30th of last month, Hangang Asset Management received official approval from the Ministry of Land, Infrastructure and Transport to operate as a real estate investment trust (REITs) asset management company (AMC) concurrently. It is known that they plan to utilize their accumulated expertise in real estate investment and finance, as well as related networks, to include various products such as high-quality logistics centers and office assets both domestically and internationally in REITs.