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Alternative investment

POBA to commit $120 mn to US housing development fund

Mar 23, 2020 (Gmt+09:00)

The Public Officials Benefit Association (POBA) will commit $120 million to a US single-family housing development fund worth about 750 billion won ($600 million) run by JPMorgan Asset Management, the retirement fund said on March 23.

The housing fund has also attracted a number of US institutional investors to make joint investment in single-family rental homes across the US.

The fund aims for a net internal rate of return of 9% with a build-to-core strategy, according to South Korean news provider the Financial News. It will maintain a 50% loan-to-value ratio after housing development is completed.

POBA is diversifying into the US single-family housing development market, seen as relatively a haven in an economic downturn, following its investments in multifamily homes in the US and Japan.

In 2018, the $11 billion pension scheme invested 200 billion won in Japan’s multifamily residential units through a fund managed by JPMorgan Asset.

Earlier this year, POBA agreed to form a $312.5 million joint venture with California State Teachers’ Retirement System to make equity investment in US multifamily properties.

Because of the coronavirus fears and travel restrictions, POBA’s US-based staff took charge of due diligence work on the properties in which the joint fund is set to invest.

Its experience of investing in Japan’s housing market in cooperation with JPMorgan helped to make the new investment decision, a POBA source said.

POBA will contribute capital flexibly to the JPMorgan’s single-family housing fund via Seoul-based IGIS Asset Management Co. Ltd. over the next three years.

“If pension and savings funds, which have long-term investment horizons, do not invest because of economic instability, we will miss out on bargain-hunting opportunities in the global asset management market,” the POBA source told the Korean Investors.

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

Yeonhee Kim edited this article

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