Samsung SRA launches UK real estate debt fund

Samsung SRA Asset Management has launched a debt fund targeting the UK office market.

The fund received commitments of £170m (€190m) from mostly from Korean insurance companies in a first close.

Young Wuk Chai, Samsung SRA’s chief investment officer, told IPE Real Assets that the fund will provide senior and mezzanine debt on terms ranging from two to seven years.

“We will offer loans at competitive rates in the top three office markets in the UK – London, Manchester and Birmingham,” he said.

Chai added that the fund will lend to stabilised and transitional assets with loan-to-value ratios of up to 65% for senior debt and 75% for mezzanine.

“We think it is timely to launch the fund in the UK at a time when European banks appear to be less active in the market,” he said.

Chai hopes to deploy the first tranche of capital raised within a year, although the fund has a two-year investment period.

Samsung SRA has been active in mezzanine debts in the US. Earlier this year, it raised its second US-focused fund.

Chai said Samsung SRA is also considering entering the Australian mezzanine debt market after it beds down its UK fund.

In the interim, the Korean manager is looking at lending to specific office property projects in Australia.

Samsung SRA has recently expanded its focus beyond equity investment to include debt to meet demand from selective Korean institutional investors, who are turning to “more conservative” investment.

Young said those investors, especially insurers, are prepared to accept lower returns from lower-risk debt investment.

Samsung SRA has equity exposure in the UK office market to just one asset – 200 Aldersgate in London – for £315m. This is held in its Global Core Office Real Estate Investment Trust No 2.

The manager is currently disposing of an office block housing the Commerzbank headquarters at 30 Gresham Street in the City of London, on behalf of its parent, Samsung Life Insurance. The asking price is £425m.

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