A South Korean fund is buying the former postal building near 30th Street Station that houses the IRS's local offices, as the Asian country's investors increasingly tap U.S. real estate for stable returns.

The fund, managed by Seoul-based Korea Investment Management Co., is under contract to buy the 862,700-square-foot building now known as Cira Square from Brandywine Realty Trust for $354 million, Brandywine CEO Jerry Sweeney said Wednesday.

It's the latest acquisition by South Korean fund managers drawn to U.S. office buildings occupied by government or investment-grade tenants with plenty of time left on their leases, said Lucy Fletcher, a managing director at real estate services firm JLL.

Such assets appeal to Korean managers, who generally target a steady return of about 6 percent to satisfy the pension and insurance funds they serve back home, said Fletcher, who directs JLL's international capital group in Chicago. Cities such as Philadelphia are coming onto their radar as soaring prices in such cities as New York and San Francisco make such yields unobtainable.

"They've been moving into some of the secondary markets like Philadelphia, but acquiring these kinds of best-in-class assets with these long-term unexpired tenancies," she said.

Radnor-based Brandywine will continue to manage the former 30th Street Main Post Office building for Korea Investment after the conclusion of the sale, expected in the first half of first quarter 2016, Sweeney said.

Proceeds from the sale will pay off the $177.4 million mortgage remaining on its nearby Cira Centre South parking garage. The sale was among $395.5 million in transactions Brandywine announced Wednesday, including properties in King of Prussia, Wilmington, and Carlsbad, Calif.

Brandywine purchased the 1930s-era post office property in 2007 for $28 million. The IRS moved into the building in 2010 on a 20-year lease after $225 million in renovations.

The agency pays $32.1 million a year in rent, which also includes 1,200 parking spaces, according to the U.S. General Services Administration, which administers the lease.

Similar transactions involving Korean funds include Mirae Asset Global Investments' $218 million purchase of the 31-story 225 W. Wacker Dr. building in Chicago and its acquisition this year of the 569,800-square-foot 1801 K St. building in Washington for $445 million.

A venture involving Korea's Samsung conglomerate reportedly has a deal to buy the Chicago headquarters of BMO Harris Bank for $320 million.

The Cira Square purchase is central Philadelphia's first by an overseas buyer since Germany's Commerz Real A.G. bought an 80 percent stake in the Comcast Center in 2006, according to data compiled by Colliers International. Commerz Real divested itself of that interest in 2013.

The sale also comes as Center City's office market sees an unprecedented volume of activity, with transactions totaling nearly $2.4 billion over the last 24 months, real estate services firm CBRE said in a report Tuesday.

But market conditions likely played less of a role in Korea Investment's decision to acquire the former post office property than did its stable government tenants and high rents, Fletcher said.

It's "an asset-led, rather than a city-led, strategy," she said. "Rather than saying, 'We're going to buy in Philadelphia, let's find a building,' they're looking at where an opportunity comes up."


215-854-2615 @jacobadelman