[Edaily Marketin KIM SUNG-SOO Reporter] Koramco Asset Trust is accelerating preparations to establish and invest in a 500 billion won domestic real estate blind fund, which it is creating in partnership with the Government Employees Pension Service.

Although the original deadline for establishing the fund is next year, Koramco Asset Trust plans to finalize the fund’s formation and execute investments by the end of this year.

The strategy involves implementing a “Core Plus” approach that pursues both stability and profitability, aiming to generate additional returns while maintaining the Civil Service Pension Service’s principles of stable management.

Koramco Recruiting Co-Investors for Fund… Koramco to Invest Its Own Equity Share

According to the financial investment industry on the 29th

,

Koramco Asset Trust recently began recruiting

limited partners

(LPs) for the Civil Service Pension Service’s domestic real estate blind

fund

. The response from institutional investors is reportedly positive.

The Government Employees’ Pension Service plans to contribute 250 billion won to this project to establish a blind fund totaling 500 billion won. The capital contribution will be made via capital calls (on-demand payments). The remaining funds are expected to be raised through contributions from co-investors and Koramco Asset Trust’s own capital (GP commitment).

“GP commitment” refers to the amount of the fund manager’s (GP’s) own capital contributed directly to the fund to demonstrate responsible management and build trust. The structure does not require co-investors to contribute the same 250 billion won as the Public Officials’ Pension Service; the final contribution ratio is expected to be determined based on the results of the investor recruitment process.

Koramco Asset Trust is increasing its presence among institutional investors, having been selected in quick succession this year—first by the Public Officials’ Pension Service and then by the Korea Post—as the preferred negotiator for the management of its domestic real estate blind fund.

This fund will be managed using a “Core+” strategy that pursues both stability and profitability. The Core+ strategy focuses on core assets (high-quality assets) to secure stable rental income while simultaneously increasing asset value through active asset management, such as small-scale remodeling, improvements to lease structures, and operational efficiency.

Blind fund to be established as early as this year… 'Target' to execute investments within the year

Since

the fund

prioritizes stability over aggressive development projects, the proportion of value-add investments is limited to 35% or less of the total fund. This strategy aims to generate additional returns while maintaining the Korea Public Officials’ Pension Service’s principles of stable management.

The value-add investment strategy involves sacrificing a portion of initial dividend income to increase the fundamental value of assets through △major renovations, △change of use, and △reduction of large-scale vacancies, thereby maximizing capital gains at the time of sale.

Investments using the pre-purchase method are included, while other development project investments are excluded. The fund’s target rate of return is 9% or higher, based on the internal rate of return (IRR), after deducting all costs and fees.

The fund’s maturity is within 10 years (from the fund’s initial establishment date or the REIT’s initial establishment date), and the investment period is within 2 years (from the fund’s initial establishment date or the REIT’s initial establishment date).

The market is paying close attention to the possibility that this Public Officials’ Pension Fund will be established faster than expected. Although the trustee has granted a fund establishment period extending through next year, Koramco aims to complete the fund’s formation and execute investments within this year.

An official in the financial investment industry stated, “As Koramco has moved to recruit limited partners (LPs) faster than expected, the likelihood of forming the fund and executing investments within this year is increasing,” adding, “Even amid high market volatility, institutional investors’ preference for the Core-Plus strategy remains strong.”