DC's K street
WASHINGTON, DC–Samsung Life Insurance Co.'s real estate asset management subsidiary Samsung SRA is launching its first US office mezzanine debt fund and has included Washington DC as one of the six core market in which it will invest.
It has tapped JP Morgan Asset Management-Global Real Assets as the investment manager for the $270 million fund, which surpassed its initial goal by $70 million at closing. The other cities in which it will invest are New York, Boston, Chicago, San Francisco and Los Angeles.
The fund is meant to give Korean institutional investors access to mezzanine debt on stable core office assets in these cities central business districts.The fund expects to deploy the full capital by acquiring fixed-rate mezzanine notes of up to $150 million, with a loan-to-value ratio of up to 65%. The fund has already closed its first investment, a $108.5 million subordinated debt position on a Class A office tower in Chicago.
The fund represents a new phase of growth for Samsung SRA, according to its CIO Young Chai. It is the subsidiary's first commingled mezzanine debt fund and coupled with JP Morgan Global Real Assets' expertise it should deliver “superior risk-adjusted returns for our investors,” Chai said.
The fund's oversubscription is telling, Candace Chao, head of Mezzanine Acquisitions for JP Morgan Asset Management – Global Real Assets, said in a prepared statement. It “points to the attractiveness of Samsung SRA's real estate investment track record, as well as its well-timed strategy in a yield-starved marketplace,” she said.
“Mezzanine debt can help provide investors the yield and diversification they seek, as well as tax-efficient exposure to the U.S. real estate market for non-US investors.” JP Morgan was unable to return a call in time for publication.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
