[RFP] Korea Post invites bids for $450 mn US first mortgage co-investment

  • 2016-08-24

Korea Post’s savings unit is seeking three global real estate fund managers to make joint investments in first mortgages of U.S. commercial assets for a total of $450 million, the postal service agency said on August 19.

It will commit about $150 million in each of three separately managed accounts (SMAs) which are required to make loan investments in core properties mainly in gateway or secondary regions. The SMAs, likely to be launched in the last quarter of this year, will expire within 12 years: 10-year lending period and subject to a two-year extension.

Korea Post will receive proposals by September 2 at 5 p.m. (Korean time)

According to the request for proposal posted on Korea Post’s website, the blind-type investment vehicles are expected to deliver gross returns of more than 3.8%: for each investment case, the expected returns are more than 200 basis points over 10-year treasury yields.

Qualified global management firms must specialize in commercial real estate first mortgage investments, and should make at least 50% of each loan investment to be carried out together with Korea Post. The state-run agency will cap the sum of management fees to be paid to overseas and domestic fund houses to 40 basis points of the outstanding invested capital a year, without paying performance fees.

After a quantitative evaluation, Korea Post will screen submitted proposals with a focus on joint investment ratios and whether they are exposed to trophy-class assets; expected returns; and whether they have a local presence or local contact.

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<Edited by Yeonhee Kim>