By Yoon Ja-young
Staff Reporter
A consortium led by Kumho Investment Bank has signed a contract to acquire the AIG headquarters building in New York. This is the first time for a Korean fund to buy a skyscraper in downtown New York.
Kumho Investment Bank said it would acquire the headquarters of American International Group (AIG) and an adjacent office building in New York, in partnership with Youngwoo & Associates (YWA), a U.S. real estate development company.
The Kumho and YWA partnership competed with around 20 bidders in a sales process arranged by CB Richard Ellis.
``The investment is based on our optimistic view on the future of Wall Street, New York City and the U.S. financial services industry,'' Kim Yong-chan, director of Kumho said in a statement.
AIG, the giant global insurance firm collapsed during the initial stages of the financial crisis, and has been trying to sell its assets. The gothic-like spire-topped headquarters building, currently the fifth tallest in New York, was built in 1932 during the New York skyscraper race. The 66-story-building is located on Pine Street 70, and is linked with a 19-story building on Wall Street. Kumho will acquire both of them.
Kumho said it can't reveal the price due to the contract. Real estate market analysts, however, estimate it at between $400 million and $500 million. Its value has fallen considerably since the outbreak of the global financial crisis, when it was estimated at between $800 million and $900 million.
Kumho plans to form a consortium with institutional investors and pension funds, both at home and abroad. ``Many investors are showing interest in the deal. We are currently in final talks,'' a spokesman at Kumho Investment Bank said.
The AIG building has a bright outlook as an investment. ``In some parts of the United States, rent has become more expensive than buying the house. It might be a signal that the housing prices are hitting bottom. The U.S. economy is going through hardship, but Manhattan is still the center of the global financial industry. It will recover with the economy,'' the spokesman said.
Global funds, including investors from the United States, have reaped good investment returns by purchasing large buildings in Korea at cheap prices when the country was hit by the Asian financial crisis a decade ago.
This is the first time that Kumho Investment Bank has engaged in overseas real estate investment. Established in 1974, its paid-in capital stands at 89.9 billion won as of the end of last year, and it has total assets worth 1.31 trillion won. It recorded 18.4 billion won in operating profit last year.
Woori Finance Private Equity Fund (PEF) is its biggest shareholder, with a 41-percent stake. Kumho Asiana Group holds a 22-percent stake, though the investment bank was separated from the group in 2007.