[THE INVESTOR] Public Officials Benefit Association of South Korea has decided to withdraw 70 billion won (US$64 million) from a real estate fund that invested in commercial properties in major US cities, according to Seoul Economic Daily on Sept. 6.

The association had invested in the fund in 2013. The 1.7 trillion won fund has yielded 11 percent annual internal rate of return based on the real estate in major US cities with long-term lease to government offices. 

The state-run public pension, with 8 trillion won in assets, is divesting from the fund because “with the interest rate set to rise, the rent is not adjustable … and there is no need to retain real estate assets,” an official told the local media.

This is the first time a South Korean institutional investor is pulling out of the US real estate market since Federal Reserve Chair Janet Yellen hinted at another interest rate hike in August.

By Hwang You-mee (glamazon@heraldcorp.com)