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Alternative investments

Meritz Alternative commits $150 mn to US multifamily fund

Jan 18, 2021 (Gmt+09:00)

(Courtesy of Fairfield Residential)

South Korea’s Meritz Alternative Investment Management Co. has committed $150 million to a new US multifamily residential fund managed by Fairfield Residential for a target return of around 7%.

The commitment marks its second investment in funds managed by the San Diego-based apartment developer and operator in a year.

Meritz put in another $150 million to Fairfield's prior multifamily fund in March of last year, according to investment banking sources last week. It was first reported by the Financial News.

Fairfield is majority owned by the California State Teachers’ Retirement System (CalSTRS). It has already deployed 70% of the prior fund's capital it received in commitments.

The latest fund is targeting residential assets in core US cities.

Multifamily residential complexes have 200 to 750 units per building or within a housing development. Demand for US multifamily housing has been on the rise, benefiting from urbanization and demographic changes, as well as low borrowing costs.

Fairfield Residential manages 42,200 housing units across the US. In 2019, CalSTRS acquired a majority stake in Fairfield Residential from Brookfield Asset Management. 

The average vacancy rate of US multifamily housing decreased to 3.6% in the third quarter of 2019, the lowest level in 25 years, the Financial News said. 

Shin Jun-hyun, ex-real estate investment head of Hyundai Asset Management Co., has been leading Mertiz Alternative since its inception in 2016. It manages assets on behalf of Korean institutional investors.

Meritz Alternative, wholly owned by Meritz Financial Group, has been focusing on US real estate investment. In 2019, the company arranged a $100 million investment in a mezzanine loan secured by a portfolio of US budget hotels.

By Seon-Pyo Hong

rickey@hankyung.com 

Yeonhee Kim edited this article.

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