ASIA - ING Real Estate has described the Asian retail market as "fundamentally sound" and announced the acquisition of 80% stakes in two South Korean hypermarket developments, in a joint venture with an unnamed local insurance firm.
The insurer provided US$124m (€80m) for the two assets in Jochiwon and Cheon-An, and the assets were in turn acquired for ING Real Estate's target US$1.2bn Asia retail fund.
The Jochiwon hypermarket was completed in April while the Cheon-An hypermarket is scheduled for completion in September 2008, and these new assets follow the earlier acquisition of a South Korean shopping mall for the fund.
South Korean law prevents the firm acquiring a 100% stake in the hypermarkets so Tony Wong, spokesman for ING Real Estate Asia, described the co-investment shareholding ratio as "a negotiated commercial outcome".
"Local regulations require two independent shareholders in the acquisition structure deployed for this transaction," he said. "It partly enables ING Real Estate to forge stronger relationships with established local players."
The firm cited the South Korean market as "good investment potential". However, Wong emphasised Korea represents only one regional target market for further retail acquisitions.
"We believe the longer-term fundamentals for retail investment in Asia are sound," he said. "With growing per capita income, the demand for quality shopping will persist."
Non-Korean assets already acquired for the fund include a Malaysian retail centre and two Japanese shopping centres.
Institutional investors who are already invested in South Korean retail include Bankpension, the €1.52bn Danish financial services sector pension fund, and pension fund administrator MN Services.
Both are investors in the Triseas Korea fund, launched in 2002 by Doran Capital and managed by a former market head of Morgan Stanley Real Estate Fund .
The seven-year core-plus fund, which is 65% geared and announced its first closing this year, is targeting an annual 15-17% return.
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