South Korea’s National Pension Service (NPS), one of the largest pension funds in the world, has announced a strategic partnership with Almanac Realty Investors, a subsidiary of Neuberger Berman, to strengthen its global real estate investments. The partnership aims to diversify NPS’s alternative investment portfolio and enhance long-term returns.
The two entities will initially commit $800 million in capital, with plans to scale this amount in the future. Their collaboration will focus on providing capital to real estate asset management firms, acquiring minority stakes in real estate investment managers, and investing in General Partner (GP) equity stakes.
Matthew Kaplan, CEO of Almanac Realty, described the partnership as a significant milestone for the firm. He highlighted that the combined expertise of both organizations would help identify growth opportunities in the evolving real estate market. Almanac has invested over $8.3 billion across 56 real estate investment firms in North America and operates under Neuberger Berman, which manages $509 billion in assets.
NPS has been increasing its allocation to alternative investments, including global real estate, to counter the challenges of achieving excess returns from traditional equities and bonds. As of October 2024, NPS had $128.5 billion in alternative investments, representing 16% of its portfolio, with a return rate of 8.90%.
NPS Chairman Kim Tae-hyun reaffirmed the fund’s commitment to identifying diverse investment opportunities in his New Year’s address, emphasizing the importance of strengthening global monitoring systems and enhancing the operations of overseas offices to ensure stable, long-term returns.
The influx of South Korean capital into U.S. real estate represents both opportunities and challenges. While it provides much-needed liquidity to a sector grappling with higher borrowing costs and regulatory constraints, it also raises concerns about rising property prices and increased competition for domestic investors. Furthermore, the alignment of long-term objectives between international partners may be tested by shifting market conditions or geopolitical tensions.
This partnership underscores the growing interdependence of global economies. For South Korea, it offers a pathway to enhance pension fund returns amid a rapidly aging population. For the U.S., it reaffirms the continued appeal of American real estate as a stable and attractive investment destination. As cross-border capital flows increase, the success of such collaborations will depend on strategic execution and adaptability in an ever-changing global market.
