Mastern APAC, STS Raising $150M for Korean Senior Housing Fund

Korean real estate fund manager Mastern Investment Management and local developer STS Development are seeking to raise at least $150 million from Asian investors for Korea’s first senior housing development fund, as Korea’s rapidly ageing population fuels demand for residential units suitable for elderly residents.

The partnership between STS and Mastern APAC, the fund manager’s Singapore-based unit, aims to provide an “integrated platform” for care facilities catering to seniors, and eventually all age groups, according to a LinkedIn post from Mastern last week.

“As societies continue to age, allowing seniors to enjoy positive and healthy lives has become important,” an STS spokesperson said, according to local media accounts. “We will not only provide facilities for seniors, such as nursing hospitals, but also operate facilities for all age groups in need of care.

The fund’s establishment comes as over 20 percent of Korea’s population is expected to be over the age of 65 in 2025, with that proportion projected to increase to one third by 2050, according to the OECD.

Ageing Population

The vehicle is set to be Korea’s first healthcare real estate private equity fund, with Mastern and STS acting as 50-50 co-managers of the vehicle. STS will oversee local project management, while Mastern engages in fundraising from Asia Pacific-based investors, Mastern representatives said.

“I’ll be talking to LPs, asset managers whose investment mandates include healthcare and Korea, and REITs listed on the SGX,” Jude Yang, managing director at Mastern told Mingtiandi. “We have just launched the project and we are still at the early stage of fundraising. However, healthcare, senior housing, nursing homes, ageing population, and Korea residential themes will tick a lot of boxes for investors, so I’m optimistic on raising capital in 1Q 2024.”

Yang added that the number of properties to be developed will depend on the final fund size. The facilities will be built adjacent to major hospitals in Korea, with the size of each property determined by factors including outpatient demand in each region.

STS has already obtained building permits for its first facility near Seoul National University Bundang Hospital.

Expanding in Asia

The partnership comes as Mastern looks to expand its footprint in Asia, following through on the establishment of its Mastern APAC unit in 2022. The subsidiary has secured investment opportunities across Asia and has conducted meetings with approximately 600 investors and real estate professionals over the past 12 months, according to the company’s LinkedIn post.

Mastern, which managed $27 billion of global assets across office, logistics, residential, hospitality, and other sectors as of September 2023, had 20 percent of its portfolio outside of Korea, mostly located in Europe and the US.

The fund marks Seoul-based STS’ entry into the senior housing market, after the company formed a joint venture with Caredoc, an online listings platform for senior care facilities in July 2022.

Established in 2004, the developer’s portfolio comprises at least 50 domestic projects across the retail, residential, industrial, and officetel sectors, as well as 10 overseas projects in China, Vietnam, and Thailand.

Korea’s Lotte Group has also entered the senior housing market, with the conglomerate launching its Vitality & Liberty (VL) brand of premium serviced residential complexes for the elderly in 2022. The first project, VL Osiria, will open in Busan in October 2024 with 574 residential units.