If one wants evidence that the world’s largest investors have not universally shunned real estate managers in favour of doing deals direct, then they need look no further.
The $242 billion National Pension Service of Korea is committing $400 million of equity to two separate account mandates – the first in Europe to London-based Rockspring Property Investment Managers and the second in Asia to Prudential’s real estate investment management arm, Pramerica Real Estate Investors.
Rockspring, which has already been busy putting NPS capital to work in London following a separate account mandate awarded last year, and Pramerica, with which NPS is also an investor in one of its European core funds, have been charged with investing in equity deals via core-plus strategies across their respective regions. Both are expected to deliver returns of approximately 10 percent from investments.
Rockspring and Pramerica both won separate GP beauty parades, which culminated in final shortlists of three firms in each region.
The appointments are the first real estate separate account mandates awarded by NPS in which managers have been granted full discretion on investments. Rockspring’s previous mandate, which led to the firm investing in various central London offices, was granted on a non-discretionary basis.
One source with intimate knowledge of NPS said it was keen to continue working with third party managers and would award more mandates in the future. Another area NPS wants to make investments is in US debt via refinancing and restructuring opportunities and the pension fund has evaluated awarding a further $400 million mandate to the strategy.
Led by senior portfolio manager Andie Kang, the Korean real estate team has four staff and no plans to follow the likes of ADIA and GIC in growing a sizable real estate platform of its own. NPS wants more than 10 percent, or $24 billion, invested in alternative assets including real estate by 2014, so there’s plenty of capital to allocate and seemingly little time to do it.
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