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NPS, KIC and Lotte eye Cerberus distressed RE fund

The Korean institutional investors have shown growing interest in the distressed real estate market in Europe.

Korea’s National Pension Service, Korean Investment Corporation and Lotte Insurance are planning to invest a combined amount of around $370 million (€330 million; £287 million) into Cerberus Capital Asset Management’s latest distressed real estate fund, Cerberus Institutional Real Estate Partners IV, according to local press sources.

The sources reported that NPS will commit $200 million to the fund, followed by a $150 million contribution by KIC and another possible $20 million by Lotte.

Two other Korean Investors, Kyobo Life Insurance and Korea Specialty Contractor Financial Cooperative, are also said to be interested in the fund.

south-korea-travelNPS, KIC and Lotte could not be immediately reached for comment.

Cerberus Institutional Real Estate Partners IV was launched in 2015 and had raised over $600 million at first close. It has a target amount of $1.2 billion and is focusing on distressed real estate debt transactions including non-performing loans, bridge loans and mezzanine debt in the US and Western Europe. It is eyeing a gross return between 17-20 percent.

Existing investors in the fund include the San Francisco Employees’ Retirement System (SFER), which earmarked up to $100 million last year, according to sister publication PERE.

“In the current situation, we might actually see more opportunities in debt strategies in Europe, such as the European NPL market,” one of the Asian Institutional investors told PDI.

With the implementation of Basel III, European banks are attempting to shed their NPLs in order to meet the capital requirement under the latest regulation. This has provided attractive opportunities for distressed investors around the world.

Cerberus Asset Management started its real estate business in 2004 and has raised $1.25 billion for CIREP I in 2004, $1.25 billion for CIREP II in 2008 and $1.4 billion for CIREP III in 2012, according to PERE Research & Analytics and SFERS documents.