Mirae Asset Global Investments Co. Ltd. is considering raising around 500 billion won ($433 million) in a global real estate fund, buoyed by hefty returns of its first such fund closed in 2015.
The new fund, if launched, will be a follow-up to the 450 billion won blind-pool, real estate fund which made the leveraged acquisition of the Cologne City Hall building in Germany for 490 billion won last year and extended mezzanine loans secured on logistics centers of FedEx, according to investment banking sources on July 5.
Mirae Asset, South Korea’s leading mutual fund house, may diversify portfolios of the new fund with various credit tranches and regions, focusing primarily on the US and Europe.
At end-December 2016 and end-June 2017, Mirae’s first global real estate fund – Mirae Asset Maps Global Real Estate Investment Trust I – paid dividends to investors including South Korean pension funds and insurance companies, as well as Mirae Asset Daewoo Co. Ltd. Brokerage firm Mirae Asset Daewoo committed around 100 billion won.
The payments are equivalent to an annualized dividend yield of around 9%, boosted by around 0.5% premium in cross currency swaps.
Currently, South Korean investors earn a 1.2% premium a year in five-year euro/won currency swap transactions, while paying 0.7% to swap the won into the US dollar.
“The blind fund of Mirae Asset used up capital quickly after snapping up the two blue-chip investment targets,” said a real estate investment source. “Blind funds, which have stable capital flows and speedy decision-making process compared to project funds, are increasingly snapping up major global real estate assets.”
Mirae Asset began global real estate investments in 2006 with the acquisition of an office tower in Shanghai. Its global real estate AUM reached 4.5 trillion won at end-June.
It is distinguished from domestic rivals which have yet to roll out global funds because domestic asset owners prefer global fund houses for overseas investments. Cross-border investment funds launched by big South Korean companies such as Samsung and NongHyup Financial Group relied heavily on affiliated companies for fundraising.
Samsung SRA Asset Management Co. Ltd. recently closed a 500 billion won blind-pool real estate fund in which Samsung Group units and other asset owners participated. Institutional investors other than Samsung companies represent about 60% of the participants, according to a Samsung Group source.
By Daehun Kim
<Edited by Yeonhee Kim>