Korean Pension to Invest in US Real Estate

(September 24, 2010) — South Korea’s 300 trillion won ($259 billion) National Pension Service, the world’s fifth-largest pension fund, said it will invest $300 million in US property through real estate investment firm Townsend Group.

The deal marks a sign that foreign investors increasingly are delving into the US property market, flocking to troubled property funds for their steady return in hopes of rebounding markets.

The fund’s primary focus will be to gain control of stakes in troubled private-equity real estate funds and then recapitalize them, investing in property in North and South America. In a release, Townsend stated that it will target secondaries, recapitalizations, joint ventures and club investments, and would start investing immediately.

“We believe this to be an opportune strategy, at this point in the market cycle, as the industry struggles with ongoing liquidity and capital constraints of traditional participants,” said Anthony Frammartino, partner at Townsend, in a statement. “As capital raising for new fund investments proves difficult, there remains a dearth of organized capital that can act with a sense of urgency and also provide critical mass for execution.”

The South Korean fund has been investing in overseas stock and real-estate markets to diversify away from domestic fixed-income holdings, the Wall Street Journal reported.