Apollo Global Management has attracted 80 billion won ($72 million) from a couple of South Korean pension funds to refinance part of bank loans it had borrowed to acquire 30 properties in Germany, according to investment banking sources on Sept. 26.
The New York-based alternative investment firm provided senior loans secured by office buildings, hotels and other properties in major German cities it had purchased earlier this year. The total value of the loans offered to global investors is not disclosed, nor are details on the Korean investors.
The collateralized loans are expected to offer about a 4% return a year for a period of five years, slightly below 5~6% which overseas property mezzanine funds currently offer. But an offshore investment official of an asset management firm in South Korea said that the 4%-level return from senior loans are reasonable in consideration of risks involved.
A real estate investment unit of South Korea’s Meritz Financial Group arranged the senior loan investment for domestic investors. Secured lending products and real estate investment funds are attracting a growing number of domestic institutional investors in search of steady incomes of about 4~5% a year.
Recently the real estate investment firm of Meritz had formed a fund with four domestic institutional investors to invest around 150 billion won in mezzanine debt secured by Gas Company Tower in Los Angeles, a class-A office skyscraper. The fund is reportedly targeting an annual return of 6% for the investment period of five years.
By Daehun Kim
<Edited by Yeonhee Kim>