POBA commits over $200 mn to Europe-focused real estate SMA

South Korea's Public Officials Benefit Association (POBA) has committed 270 billion won ($240 million) to a separately managed account (SMA) focusing on Europe's real estate market, according to a local media report.

The SMA, managed by Seoul-based IGIS Asset Management Co., will diversify POBA's office-oriented portfolio into life science buildings, student housing complexes and last-mile distribution centers in major cities across Europe, the Financial News reported on June 13.

It will also broaden its horizons into listed real estate investment trusts to speed up capital deployment. 

Previously, the $15 billion retirement fund for South Korea's provincial government employees had invested 223 billion won via the IGIS-run SMA in A-grade office buildings in Europe, including in Hamburg of Germany, Brussels of Belgium, Barcelona of Spain and Prague of the Czech Republic, since 2017.

Their combined asset value, including the amount of debt raised for the purchase, is about 490 billion won, the daily added. Gains from currency hedging trade are expected to bolster returns from European assets. 

This year, POBA has earmarked over 1 trillion won for new real estate investments overseas, the bulk of which would be deployed through SMAs and co-investment platforms to ease the burden of due diligence, its Chief Investment Officer Jang Dong-hun and a senior POBA official told panel sessions of the ASK Summit 2021 held in May.

Yeonhee Kim edited this article.