NH Investment launches $150 mn real estate fund

South Korea’s NH Investment & Securities Co. said on Wednesday it has launched a 200 billion won ($150 million) real estate fund for institutional investors for value-add and opportunistic investments.

The National Agricultural Cooperative Federation (NACF), its parent company, anchored the fund, accounting for about 60% of the commitments. Some real estate developers and mutual savings institutions also participated in the fund.

It is now reviewing five to six property assets for investments, according to NH Investment.

The fund will focus on raising the value of properties through refurbishment and increasing their rents. It will also buy and develop land, or buy non-performing assets at relatively low prices and renovate them to maximize returns.

To beef up real estate investments, NH Investment set up a real estate private equity division managed by real estate financing experts at the end of last year.

The brokerage house has strengthened its expertise in real estate investments by arranging high-profile deals.

The property investments it led include the City Center Tower in central Seoul; Parc.1, a commercial and office skyscraper in Yeouido, Seoul’s main finance district; Brighten Yeouido, a residential and office building; and Angsana Residence Yeouido.

MERITZ SECURITIES' DEBT FUND

Separately, Meritz Securities Co., is seeking to raise 300 billion won ($225 million) for a real estate debt fund in the first half of this year, which is poised to become its first private equity fund tailored to institutional investors.

Meritz Securities and Meritz Fire & Marine Insurance Co. will invest in the fund. Their commitments are expected to make up a combined 30% of the fund: 20% from Meritz Securities and 10% from the insurance unit. They are tapping major pension funds and mutual savings institutions in South Korea for the fundraising.

The fund will extend senior loans for real estate projects and senior secured loans collateralized by real estate assets.

Meritz Securities is a leading project financing provider in the country. The new fund is expected to ease the liquidity crunch in the domestic real estate market battered by elevated interest rates.

Investment bankers said Meritz’s fund launch will likely encourage its domestic peers to follow suit.

“Several asset management companies are expected to launch project financing funds and real estate debt funds this year to meet strong demand from institutional investors in pursuit of high-yielding funds,” said a real estate financing company official. 

For the fundraising, Meritz Securities registered as a private equity general partner for institutional investors with the regulatory Financial Services Commission (FSC) last month.

Since 2021, financial institutions in South Korea are not allowed to raise private equity funds simultaneously from institutional and retail investors as regulators have tightened their scrutiny over investment funds.

Write to A-Young Yoon and Byung-Hwa Ryu at youngmoney@hankyung.com
 

Yeonhee Kim edited this article.