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M&G invests $230m in South Korea

M&G Real Estate has made its first retail acquisition in the country with the purchase of three retail assets via its Asia core fund.  

M&G Real Estate, the real estate investment management arm of the London-headquartered insurance company Prudential, has acquired three retail properties in South Korea for a combined value of $230 million.

The assets were acquired via M&G Asia Property Fund, the firm’s core open-ended Asia real estate fund. The deal is understood to reflect an average yield of 6.5 percent.

M&G has made prior property buys in South Korea but this deal marks the firm’s maiden investment in the country’s retail sector. Two of the assets are hypermarkets (self-service supermarkets-cum-department stores) located in Daejeon and Jeju cities, while the third is an outlet mall located in the Incheon City. All of them are currently leased to one of South Korea’s largest retailers, Lotte Shopping.

Hyesik Ryu, managing director, M&G Real Estate Korea, said the firm was one of the first non-domestic institutional investors to invest in South Korea, with the purchase of a commercial office property in 2004.

“M&G has developed a deep understanding of the market, enabling us to make this latest investment in the retail sector, which will strengthen the strategy’s long term income stream,” he added.

On the firm’s regional investing strategy, Erle Spratt, manager of the M&G Asia Property Fund, said: “South Korea is a key market for us and we are building a successful 10-year track record of delivering investment performance in Asia. We are seeing strong capital flows, particularly from global pension funds and insurance companies in Asia as well as the UK and Europe. With responsibility for more than $2 billion in assets, we are well positioned to pursue property investments across the region to further improve our risk adjusted returns and sustain the outperformance of our portfolio.”

M&G Asia Property Fund was launched in 2007, and has since been invested in markets such as Hong Kong, Japan, Singapore, South Korea and Australia. Prior to this deal, the firm made an investment in Japan, with the acquisition of a residential complex and an office building in Tokyo for $150 million in October last year.

The firm is understood to have raised equity in excess of $330 million via the fund last year.