Korean Pension Fund Adds $235M to CBRE GI-IGIS European Mandate

South Korea’s Public Officials Benefit Association has confirmed its commitment of an additional €200 million ($235.6 million) to a European investment vehicle managed by CBRE Global Investors and IGIS Asset Management, in a move that adds a third tranche of cash to a five-year-old strategy.

The recharge by POBA, a $15 billion retirement fund for provincial government employees, brings the vehicle’s total equity to nearly €600 million since it was established in 2016 with the goal of building a diversified European real estate portfolio.

“Our mandate from POBA is the first discretionary separate account for direct real estate investments in Europe from a South Korean institutional investor, which gives us the unique ability to deploy capital quickly on their behalf, with certainty of execution,” said Je Wook Joung, portfolio manager at CBRE GI. “Expanding our investment focus to include other sectors, we are actively seeking investments to build a well-diversified portfolio producing secure cash flow for our client and its members.”

Initially set up with a focus on offices, the mandate has been expanded to include residential, logistics and alternative sectors such as life sciences and data centres, as well as listed real estate securities, CBRE GI said in a release. After leverage, the vehicle is expected to have a fresh investment capacity in excess of €400 million.

Continental Office Portfolio

After receiving an initial mandate of €200 million in 2016, POBA reupped for another €190 million in 2018, according to local media accounts. That cash has been invested in a portfolio of European office assets, including four properties in Brussels, Hamburg, Barcelona and Prague.

The most recent addition to the portfolio is Praga Studios, a LEED Platinum sustainable building in the Czech capital’s Karlin district. Completed in 2019 and acquired by the separate account for €55 million that same year, the property has also earned a gold certification on the WELL standard for healthy workplaces.

To date, the vehicle has yet to exit from any of its projects, according to a CBRE GI representative.

A Taste for Warehouses

Aside from offices, POBA has shown an appetite for European logistics assets in recent years as once-insular Korean investors explore outbound opportunities.

In December 2019, POBA linked up with Danish pension fund PFA and German investment firm Patrizia to co-invest $670 million to acquire a $1.3 billion logistics portfolio in Europe. The parties signed a deal with Canadian investor BentallGreenOak to buy 42 logistics assets with an expected cap rate in excess of 4 percent.

In January 2020, POBA committed $111 million to AXA Investment’s $1.6 billion European logistics fund. At that time the Korean pension institution was the only Asian investor in the French firm’s fund, which has built a portfolio of 90 assets across six European countries.

Looking Outward

“We are seeing increasing demand from investors such as POBA for more holistic investment solutions across both regions and sectors,” said Bas Tiemstra, head of separate accounts for continental Europe and APAC inbound at CBRE GI, an independently run affiliate of the US consultancy with $124.5 billion in assets under management.

These investors are open to a range of strategies, from direct real estate mandates to closed and open-ended funds, as well as separate accounts for global listed real estate and infrastructure investment, Tiemstra said.

Seoul-based IGIS Asset Management has tapped the European market before, most recently tying up with Australia’s Cromwell Property Group to buy a set of Italian logistics properties from DHL for about $60 million last October.

In other Korean outbound moves, insurance giant Samsung Life grabbed a piece of the fund management pie this year by acquiring a 25 percent stake in Savills Investment Management for £63.75 million. The deal announced in May valued the unit of London-based property services firm Savills Plc at over $360 million.

While information has not been made public regarding earlier investments by Samsung Life in Savills IM funds, the companies are known to have worked together in 2018, when the UK firm managed the acquisition of a London office building by the Korean insurer.

Samsung SRA Asset Management, the real estate investment arm of Samsung Life, paid a reported £320 million (then $457 million) that year to purchase 200 Aldersgate in the City of London, with Savills IM acting on behalf of the Korean firm.