KBIZ eyes value-added, senior loans for real estate

The Korea Federation of SMEs (KBIZ) bet on value-added and senior loans in global real estate investment this year, the institutional investors’ Real Asset Investment Head Kim Tae-wan said during the LP session on real estate at ASK 2022 on Oct. 26.

It sought opportunities to join co-investments in the early stage of fundraising, with other Korean institutional investors and global general partners that have long track records, he said.

The federation of South Korean small- and mid-sized enterprises is managing 20 trillion won ($14 billion) in assets as of end-June. Alternative assets and real estate make up 23.6% and 6.2%, respectively, of the AUM.

For real estate investment, its average ticket size is 30 billion-60 billion won per equity fund and 50 billion-100 billion won per debt fund.     

The federation has focused on blind pool fund investments over the past two years due to restrictions of onsite due diligence and deal sourcing of project-based funds.

It took a very conservative approach to overseas real estate investment this year due to increasing volatility with rate hikes, the strong US dollar and the Russian-Ukraine war, Kim said.

It will remain conservative on overseas real estate investment next year due to increasing difficulties with currency hedging. Global real estate loans are less attractive than domestic ones today, Kim said.

Kim said the federation is not considering equity investment in global real estate for a while, but it may invest in newly launched senior loans with low leverage next year, focusing on assets in North America and Western Europe.

Write to Jihyun Kim at snowy@hankyung.com
Jennifer Nicholson-Breen edited this article.