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Alternative investments

KKR’s Asia real estate fund draws around $400 mn from Korea

Jan 14, 2021 (Gmt+09:00)

Namsan Square in Seoul, bought by a KKR-led consortium in 2020

South Korean institutional investors, including the National Pension Service, have committed around $400 million to KKR’s Asia real estate fund which recently made its final close at $1.7 billion for opportunistic investments.

The capital commitments from the Korean investors are divided into $200 million from the NPS, $100 million from MG Korean Federation of Community Credit Cooperatives and $50 million from the Korean Teachers’ Credit Union (KTCU), as well as an undisclosed amount from domestic brokerage firms, according to sources with direct knowledge of the matter on Jan. 14.

KKR announced the final close of KKR Asia Real Estate Partners on Wednesday, which marked its first Asia-focused real estate fund.

“The transformation of Asia Pacific’s real estate sector is creating a strong pipeline of new and exciting opportunities that are well-suited to KKR’s flexible investment approach, local expertise and deep operational experience,” John Pattar, KKR’s Asia real estate head, said in a statement.

“Increased domestic consumption, productivity and urbanization – combined with the acceleration of e-commerce and platform-based businesses and the evolution of the traditional office landscape – are fundamentally reshaping the region’s real estate sector,” he said.

Specifically, the new fund will target commercial, industrial and residential properties for opportunistic investments where "KKR can drive meaningful growth.”

The fundraising took place simultaneously with the campaign for KKR's $3.9 billion Asia-focused infrastructure fund that drew $130 million from Korean investors. Because of the overlapping period, some Korean investors were deterred from investing in the infrastructure fund due to their exposure limits. 

Across Asia, KKR has deployed more than $1.5 billion of equity in approximately 20 real estate transactions since 2011, including investments in mixed-use, commercial, industrial, hotel, office and retail properties. Its track record also includes debt financing to real estate developers and companies.

“Assets within KKR’s Asia Pacific real estate portfolio include, but are not limited to, Namsan Square, an office tower located in Seoul’s central business district,” it said in the statement.

Last year, KKR formed a consortium with two South Korean companies to acquire Namsan Square from the NPS for an estimated 500 billion won ($413 million), in a value-add investment in the 42-year-old building.

The US investment firm manages approximately $14 billion of real estate assets in the US, Europe and Asia, as of September 30, 2020. Its real estate team of around 90 investment professionals is twice the size of its infrastructure investment team in terms of number of employees.

Write to Jun-ho Cha at chacha@hankyung.com

Yeonhee Kim edited this article

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