Korean military fund to focus on stability in real estate investment

The Military Mutual Aid Association (MMAA), with $9 billion in assets under management, will focus real estate investments on stability by pursuing funds of funds and mezzanine and senior debts, as it is shedding underperforming assets mostly from projects finance loans in South Korea.

“We have been cleaning up plenty of project financing portfolios, which had turned sour and caught up with us in the past few years, by selling or normalizing their business” In Soo Shin, MMAA’s construction division chief investment officer, said in a statement released on August 1.

“We will diversify into businesses where we can achieve returns of around 5%, while diversifying  investment targets and methods, too,” he added.

MMAA’s construction division, led by Shin, had concentrated on project finance loans for large-scale construction projects in the country. Its financial investment division is headed by Jae Dong Kim.

For overseas investments, MMAA will continue to chase low-risk, long-term infrastructure assets producing steady streams of income.

It will also make real estate investments abroad through funds of funds and mezzanine and senior debt, instead of equity purchase, its alternative investment head Jin Woo Kim told the Korean Investors.

MMAA’s AUM slightly exceeded 10 trillion won ($9 billion) at end-June, including 3.8 trillion won in financial assets and 3.4 trillion won in real estate, according to its statement. In 2015, its AUM was 9.5 trillion won.

It is the third-biggest retirement savings fund in South Korea, after the Korean Teachers’ Credit Union (with 22.4 trillion won at end-2016) and the Public Officials Benefit Association (with 10.5 trillion won at end-June).

By Daehun Kim

daepun@hankyung.com