Goldman Sachs’ real estate debt fund raises $100 mn from Korea

South Korea’s institutional investors, including the Construction Workers Mutual Aid Association (CWMAA), have committed $100 million to Goldman Sachs’ new real estate debt fund which is expected to raise $2 billion in aggregate.

Goldman Sachs’ Real Estate Credit Partners (RECP) III, the latest fund in its RECP series, is known to make senior and mezzanine loans secured by real estate assets in Europe and the United States.

It also may invest in real estate development projects for higher yields, according to investment banking sources on July 3. Goldman has invested around $5 billion with the strategies since 2008.

CWMAA allocated $30 million in May to RECP III through a domestic fund of Korea Investment Management Co. which acted as a placement agent of the global debt fund.

The allocation comes just after the $2.8 billion retirement fund for construction workers awarded a 40 billion won ($35 million) mandate to Goldman for real estate investment.

Korea Investment Management has recently completed the fundraising for the domestic fund of fund, which targets annual returns of 9% to 12% with a 11-year investment period.

Other participants in RECP III include Seoul Guarantee Insurance, Engineering Guarantee Insurance under the energy ministry, and the Employment Insurance Fund which Korea Investment & Securities Co. Ltd. manages on behalf of the labor ministry.

Goldman Sachs will commit around $100 million to RECP III.

“Goldman Sachs has been investing together (with limited partners) by committing capital to real estate debt funds,” one of the investment banking sources told the Korean Investors. “That is a sort of co-investment, so their funds are attracting global institutional investors.”

In 2014, Goldman reportedly raised $1.8 billion for RECP II, which Goldman said had an investment capacity of more than $4 billion including expected leverage.

By Daehun Kim and Chang Jae Yoo

daepun@hankyung.com