POBA to allocate W300b to Koramco for real estate investment

An exterior view of Galleria Centercity department store in Cheonan, South Chungcheong Province, which Koramco Asset Management acquired early in 2020 through its blind pool fund. (Koramco Asset Management)

South Korea‘s institutional investor, the Public Officials Benefit Association, is poised to commit 300 billion won ($268.6 million) to alternative asset manager Koramco Asset Management for its investment in commercial real estate, Koramco said Monday.

Using the fresh fund, Koramco will mainly target prime office buildings in Seoul and the neighboring Bundang business district in Gyeonggi Province. The fund will be managed under the POBA guideline where 60 percent of the cash will be deployed to “core” assets in pursuit of safety, while 40 percent will go to midsized office buildings in a value-add strategy. POBA will sign a relevant contract with Koramco later this week.

Koramco said the blind pool fund pursues 5 percent annual dividend and 7 percent of internal rate of return each year in the fund’s 13-year lifespan.

With 4.1 trillion won assets under management as of January, Koramco has a track record of blind pool fund management, investing in real assets such as the Galleria Centercity department store in Cheonan, South Chungcheong Province, and a prime office building formerly used as Citibank Korea‘s headquarters.

The news came as POBA, which oversees 14.3 trillion won as of end-2019, announced plans to allocate new capital for investment in office space in November. Nearly 55 percent of its assets are currently allocated to nontraditional assets.

Meanwhile, POBA, which manages funds to support public officials’ welfare, said in December it has selected UK-based real estate investment trust AEW to inject $100 million for its listed REIT portfolio.

By Son Ji-hyoung (consnow@heraldcorp.com)