ING scoops £170m Korean mandate

Korea’s penchant for core offices in London continues as the Public Officials Benefit Association selects ING Real Estate Investment Management for an investment programme.

The Public Officials Benefit Association (POBA) has become the latest Korean institutional investor to mandate a real estate investment firm to invest in London’s core office real estate market.

ING Real Estate Investment Management said it had won the POBA separate account to invest £170 million (€192 million; $278 million) in the city. Its investments would be their first in the UK.

Kevin Aitchison, chief executive of ING REIM UK, said the mandate was won as a result of a combined effort between the firm’s Korean and UK offices.

POBA is the latest investor from Korea to seek core office real estate in London. The country’s largest insurer, Samsung Life Insurance, recently hired RREEF for a KRW500 billion (€315 million; $460 million) separate account mandate to acquire assets between $200 million and $300 million in the city and other core markets around the world. Meanwhile,Korea’s largest non-life insurance company, Samsung Fire & Marine Insurance (SFMI), also recently said it wanted to expand its real estate portfolio beyond domestic investments and has already made attempts to buy London properties.

In January this year, it clubbed together with three other Korean investors under the umbrella of ING Real Estate Investment Management to bid for 10 Aldermanbury, a 312,000-square-foot office building in the City of London from Germany’s CommerzReal, though in that instance, two of the Korean investors pulled out and the office ultimately was sold to funds run by JPMorgan Asset Management for £260 million (€296 million; $423 million).

Many of these investors have followed the efforts of Korea’s National Pension Service which mandated Rockspring Property Investment Managers in 2009 to acquire core London properties as part of a wider strategy to buy across the world’s major cities.

POBA’s tilt towards Central London offices comes, however, 18 months after initial yields first began compressing again following a collapse in values resulting from the global financial crisis. According to property services firm DTZ, the initial yield on the sale of an office called Fleet Place 1 in January 2009 was 8 percent. This January, an office in nearby Gresham Street transacted at an initial yield of 5.3 percent, the firm said, reflecting how much yields have come in.