Korean military fund anchors $142 mn real estate fund

South Korea’s Military Mutual Aid Association (MMAA), a retirement savings fund for military personnel, is set to become an anchor investor in a 190 billion won ($142.1 million) value-add fund for domestic real estate.

MMAA has committed 70 billion won to the blind pool fund created by Seoul-based Edn Investment Management, banking sources said on Thursday. The military fund’s affiliates, Hankook Capital Co. and Daehan Real Estate Trust Co., have pledged a combined 15 billion won.

Korea’s Hyundai Engineering & Construction Co. has pledged 50 billion won, the largest commitment by the construction giant to the blind pool fund. Local financial services firms including Shinhan Bank, KB Securities Co. and Hana Securities Co. and property manager KT Estate Inc., a unit of mobile carrier KT Corp., have also joined the list of limited partners.

The investment vehicle is Edn’s fourth blind pool fund. It has a three-year investment period and an eight-year maturity, with the target asset types of office, housing, logistics center and data centers.

This is the first time since 2020 that MMAA has anchored a blind pool fund for real estate. MMAA had been active in property development and project financing until the early 2010s and has been more focused on investment via blind pool funds since then.

MMAA is managing 4 trillion won in real estate investment. Chief Investment Officer Kim Yong-seok, who took office last August, is also overseeing the military fund’s construction and infrastructure investment.

Market watchers expect the military fund’s participation to boost investments in the Korean property market, which has been frozen since the debt default by the domestic developer of theme park Legoland in late 2022.  

Real estate investor sentiment has further deteriorated as the Korean Federation of Community Credit Cooperatives (KFCC), a major institutional investor, announced soaring delinquency rates for domestic project finance loans and construction firm Taeyoung Group filed for a debt workout last year.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com

Jihyun Kim edited this article.