Korean LPs commit over $200 mn to UK real estate fund

A UK-focused real estate debt fund, managed by New York-based BentallGreenOak, has received a combined £170 million ($241 million) in commitments from three South Korean institutions, including the Korean Teachers' Credit Union (KTCU).

The blind pool fund, targeting around 1.5 trillion won ($1.3 billion), is investing in real estate secured loans of office buildings as well as logistics and data centers in major cities in the UK. It targets an annual return of 9% with an investment period of 10 years.

The KTCU, a $30 billion savings fund for South Korean school teachers and employees, has committed £100 million ($142 million) to the debt fund as an anchor investor, according to investment banking sources on May 31. It was first reported by the Seoul Economic Daily on Sunday.

Hyundai Marine & Fire Insurance Co. and the National Credit Union Federation of Korea will ante up £30 million and £40 million, respectively. The National Credit Union Federation is a trade association for credit unions that provide loans to the self-employed and small business owners.

The three Korean institutions made the investments via KB Asset Management Co. in early May. Singapore's sovereign wealth fund GIC and pension funds from other countries participated in the real estate fund as limited partners.

BentallGreenOak, a US real estate investment firm, manages $62 billion in assets as of March 31. It is part of SLC Management, the alternatives asset management business of Canada-based Sun Life Financial Inc. 

The fundraising comes on the heels of BentallGreenOak's lucrative exit from a Seoul office building in less than three years. In July 2018, it acquired 31 Building in central Seoul for 178 billion won in a consortium with SK D&D. IGIS Asset Management Co. made the acquisition on behalf of the investment firm.  

In April this year, they sold the 31-story icon of Korean modern architecture for 442 billion won, or more than double their purchase price, to NH Amundi Asset Management Co. 

With the widespread rollout of COVID-19 vaccinations, a growing number of Korean institutional investors have resumed overseas real estate investment on expectations of economic recovery.

At the end of last year, the KTCU had co-invested $130 million in a US data center with Colony Capital, a US investment firm.

Still, many others opted to invest through global asset managers' vehicles due to the difficulty of on-site inspections of target assets.    

In particular, Korean institutional investors prefer large-sized funds that attract many global LPs in order to share the risk with them, according to the daily.

Write to Jun-ho Cha at chacha@hankyung.com
Yeonhee Kim edited this article.