Koramco puts $103 mn in funds for US university housing

Koramco Asset Management Co., one of the top asset managers in Korea and a 100% subsidiary of Koramco REITs Management & Trust Co., said on Oct. 27 it has set up two foreign real estate funds for investment in student housing assets of two major universities in the US. 

The new funds worth 120 billion won ($102.6 million) -- Koramco US Core Fund I-I and I-II -- will invest in Theory Syracuse, a 245-unit property at Syracuse University in New York, and Villas on Rio, a 279-unit in the West Campus of the University of Texas at Austin.

Koramco will manage the funds for eight years, while aiming for a final rate of return in the mid-8% level, including mid-7% of dividends and gains on sale of the properties. The Korean asset manager said the two student housing assets have already been fully pre-leased.

Koramco partnered with Chicago-based real estate investment firm Blue Vista Capital Management, LLC to set up a new joint venture early this month. Blue Vista completed the acquisition of Villas on Rio and recapitalization of Theory Syracuse through the partnership, approximately $250 million in total combined asset value, Blue Vista announced at the time. The JV, a new real estate investment trust (REIT) investing in the housing assets, will be under Blue Vista’s management and fully owned by Blue Vista and the new funds.

Koramco’s cumulative assets under management (AUM) is 10.2 trillion won, including 4.3 trillion won worth of assets abroad through 28 foreign funds. The asset manager is accelerating its overseas investment with its second foreign investment management team set up earlier this year.

"Given the rising college entrance rate in the US despite the economic downturn, college student housing properties are garnering attention as defensive assets. We expect stable rent income and gains from the sale in the future as the housing supply is insufficient amid growing demand,” an official from Koramco said.

Focusing on student housing, middle-market equity and real estate credit in the North American market, Blue Vista has invested over $11.2 billion in total capitalized value since its foundation in 2002. The firm has invested $3.1 billion in around 80 student housing properties since 2003 and achieved a 27% average rate of return over the past decade.  

Write to A-Young Yoon at youngmoney@hankyung.com
Jihyun Kim edited this article.