Samsung SRA raises $330m for second US real estate debt fund

Several Korean insurance companies have committed capital to the Seoul-headquartered manager's latest US real estate debt vehicle.

Samsung SRA Asset Management, the Seoul-headquartered real estate asset manager wholly owned by Samsung Life Insurance, has achieved a final close on its second US real estate debt fund at KRW360 billion ($334 million; €270 million), a person familiar with the fundraising confirmed to Private Debt Investor.

The source also told PDI that the fund will be invested in class-B notes and mezzanine debt with up to 65 percent loan-to-value ratios, targeting core office buildings across the US, including New York, Boston, Washington DC, Chicago, San Francisco and Los Angeles.

PDI understands that the fund typically sources real estate debt deals for its funds via local banks in the US.

Most of the capital for the fund has been raised from Korean insurance companies. Among the Korean investors that have committed capital to the vehicle include Samsung Life Insurance, Samsung Fire & Marine Insurance, ING Life Insurance, KDB Life Insurance, KB Insurance, NH Life Insurance and Lotte Non-Life Insurance, according to a report in the Korean Investor.

The predecessor vehicle, Samsung SRA US Office Mezzanine Debt Fund, raised $270 million from insurance companies and one financial institution in Korea.

PDI understands that the first fund was fully deployed as of September 2017 in fixed-rate mezzanine notes with a loan-to-value ratio less than 65 percent. This included a $100 million reported allocation to mezzanine investment secured for 485 Lexington Avenue in New York.

The target annual rate of return for Fund I is over 5 percent, with an investment period of 10 years.

Samsung SRA’s latest fund closing comes as Korean investors are increasing their allocations to offshore real estate investments.

Earlier in February, more than half of the Korean delegates attending Korea Conference 2018 held by the Asian Association for Investors in Non-listed Real Estate Vehicles in Seoul said that they want to increase their real estate investments, with a majority favouring value-add and debt investments.