South Korea's pension fund earmarks $400 mln for Asia real estate

SEOUL, June 11 Wed Jun 11, 2014 3:34am EDT

SEOUL, June 11 (Reuters) - South Korea's National Pension Service (NPS) has hired a U.S.-based advisor to invest $400 million in Asian real estate, as the world's fourth-largest pension fund looks to increase its exposure to property in its home region.

NPS, with 436 trillion won ($429.05 billion) in assets under management as of end-March, began investing in overseas real estate in 2006 although its focus has mainly been on the United States and Europe.

"We are considering various ways to diversify investment assets through overseas alternative investments," Yang Young-sig, NPS head of global private market investment, said at a recent investment conference in Seoul.

NPS hired the Townsend Group, a Cleveland-based real estate investment advisory firm, to manage the $400 million Asia-focused portfolio, Townsend said in a statement on Tuesday and confirmed by NPS on Wednesday.

NPS plans to increase investment in alternative interests such as real estate and infrastructure to more than 10 percent of its assets by end-2019, Townsend and NPS said.

The fund's alternative investments have risen from 18.9 trillion won or 5.8 percent of total assets at end-2010, to 40.3 trillion won or 9.5 percent as of end-2013. By comparison, NPS held 60.4 percent of its assets in bonds at end-2013.

As of end-March, NPS had invested around 17 trillion won in real estate. Its landmark property holdings include a 772.5 million pounds ($1.30 billion) investment in London's HSBC Tower in 2009, and 49 percent of New York's 230 Park Avenue, which it bought in 2011.

($1 = 1016.2000 South Korean Won)

($1 = 0.5956 British Pounds) (Reporting by Joyce Lee; Editing by Tony Munroe and Christopher Cushing)