EXCLUSIVE: Samsung unit in pioneering global office fun

Samsung SRA Asset Management has raised KRW500 billion for the first private commingled fund expressly intended for Korean institutions to gain exposure to investments in office properties in international gateway cities.

Samsung SRA Asset Management, the real estate investment management business of Samsung Life Insurance, has raised KRW500 billion (€397 million; $439 million) for a private commingled real estate to make investments in core office properties in international gateway cities.

The Global Core Office Fund I is thought to be the first example of a private real estate fund raised by a Korean investment manager expressly intended for Korean institutional investors to be able to gain exposure to office properties in markets outside of Korea.

Through the fund Samsung SRA hopes to generate returns of a minimum of 6.5 percent net IRR from investments in cash-flow generating office properties in the gateway cities of the US, the UK, France, Germany and Australia. The firm will also have the scope to deploy a proportion of the capital raised in Korea too.

The maximum leverage that Samsung SRA can use for investments for the fund is 65 percent loan to value, giving it a potential war chest of approximately $1.2 billion. 

The fund has an eight-year life, comprising a two-year investment period and six-year hold period.

The offering is something of a pioneering effort by Samsung SRA as, similar to many other Korean institutional investors, it has deployed capital into international real estate markets on a direct basis to date.

Since its inception in November 2012, the firm has made investments in the US, the UK and Germany, starting with the purchase of 30 Crown Place, a 192,000 square foot office in the City of London in a deal valued at £142 million (€200.3 million; $221.7 million). That transaction was executed in partnership with Cushman & Wakefield Investors, the former real estate investment arm of property services firm Cushman & Wakefield, known today as La Francais Forum Real Estate Partners following a takeover.

Samsung SRA completed a more sizeable deal at the turn of the year when it acquired Frankfurt skyscraper Silberturm in a transaction thought to have been valued at €450 million in partnership with US developer-cum-fund manager Hines. 

Other investments include a preferred equity position in Portals 3, an office in Washington DC, the Thales German headquarters in Ditzingen, an IDC Bosch logistics building in Worms and a mezzanine debt position in the Four Seasons Resort Maui at Wailea in Hawaii.

Though Global Core Office Fund I represents something of an all-Korean affair, it is expected, similar to its prior international investing exploits, that the firm will continue to partner with local investment managers on deals. 

The lion’s share of Samsung SRA’s $1.8 billion of assets under management are Korean properties held across a number of small funds which have been capitalized by both Korean and international institutional investors. Most of its assets are held by the firm on a direct basis although it does manage certain indirect positions also.

Samsung SRA also currently handles all acquisition and disposition activities for Samsung Life Insurance’s real estate portfolio.