POBA eyes distressed assets; reduces office buildings exposure

The Public Officials Benefit Association (POBA) will aggressively chase distressed assets to take advantage of the recent market downturn, while scaling back investment in overseas office buildings, a POBA source said on April 21.

“We had taken a little defensive stance over the past three years, but revised our strategy to look for bargains aggressively,” he told Korean Investors, without elaborating further.

His remarks came after Yonhap Infomax reported that POBA was preparing to launch a joint venture with a global pension fund to co-invest in distressed assets after the coronavirus pandemic sent global markets tumbling.

“We are preparing to take profits in overseas office buildings and take advantage of the current market conditions by investing in distressed assets,” Infomax quoted an unnamed POBA source as saying.

POBA, with $12 billion in assets, plans to reduce overseas office building investments by 180 billion won ($146 million) this year, whereas raising exposure to logistics centers, rental homes and infrastructure for global portfolios.

It is targeting a 4.1% return on investments this year, the report added, after posting a provisional 7.4% return in 2019.

It has recently exited property investments in Chicago and Cologne, Germany it had made through Mirae Asset Global Investments Co. Ltd.

The investment in an office building in Cologne, which Mirae had sold for 500 million euros in December 2019, generated an annualized internal rate of return of about 10%.

Write to Hyun-il Lee at hiuneal@hankyung.com