Korean firm expanding to overseas property

Seoul-based property investment firm Koramco Asset Management has built up an outbound property investment team to cater to Korean institutional investors looking to diversify their holdings outside the country, PERE has learned.

Founded in 2001, Koramco is one of Korea’s oldest and largest real estate investment firms, with $6.7 billion assets under management domestically. The firm set up its funds management business in 2010, but so far has raised all its capital on a deal-by-deal basis.

In the last six months, Koramco has hired three professionals to head its newly-launched overseas property investment, including Ray Park as the president and chief executive of the funds management business. Park joined in March from GE Capital, where he served as managing director for real estate in Korea for 12 years before the firm closed down its Korea office.

Over the next two years, Park said the firm hopes to grow the team to at least five people, and over five years his goal is to grow the firm’s assets under management overseas to around $1.2 billion with the backing of Korean insurance companies and pensions.

“Raising Korean capital is a natural extension of Koramco’s existing business,” Park said. “We have built a strong trust with domestic institutional investors – they can see how we manage assets.” While Koramco is expected to focus only on domestic Korean capital for now, Park added that in the long run the firm hopes to raise capital from international investors, as well.

For now, Koramco’s outbound strategy will be focused on North Asia, which Park described as a region culturally similar to Korea that is expecting high economic growth. The firm is looking to close its first overseas deal in that region this year. Park also said north Asia has strategic significance as the yields from the US and Europe decline, and he said Korean institutions have already begun looking into north Asia for diversification.

“Our long-term vision [as a firm] is to set up local platforms in the key cities across Asia,” Park said.

Park said Korean pensions and insurance companies are still growing, and annually have to invest approximately $40 billion of capital. As domestic government bond yields remain relatively low, institutions have been allocating more to property particularly. “And then the Korean market is too small for the demand, so institutions have been fairly aggressive in overseas diversification,” he explained.

Koramco is planning to initially raise its capital on a deal-by-deal basis, and is currently both sourcing deals in the market and talking to investors, according to Park. His hope is that in two or three years, however, Koramco can become a proponent of blind-pool funds with Korean investors.