Even investing in Samsung Electronics was not safe. A real estate fund that invested in Samsung Electronics' North American corporate office is suffering from a triple burden.

Although it was acquired by maximizing loans during the ultra-low interest rate era in 2020, the fund has been unable to pay investor dividends for a year due to a sharp rise in the KRW-USD exchange rate and soaring loan interest rates.

The asset manager has been attempting to sell the property in the U.S. since 2024, but has given up due to a lack of liquidity in the office market and the continuation of high-interest rates, making it difficult to find a buyer. When the loan matures in October, a significant interest rate hike is inevitable, which is expected to make dividends to general investors even more challenging. With the fund maturing in April of next year, an extension of the maturity date seems unavoidable.

Hana Alternative Asset Management (hereinafter referred to as Hana Alternative) established the "Hana Alternative Investment US Real Estate Investment Trust No. 1" in October 2020.

It acquired the Legacy Central 4 office building in Dallas, Texas, which is 100% leased by Samsung Electronics' North American subsidiary, for USD 8.85 million (approximately KRW 105.3 billion, or USD 75.82 million; including incidental costs, KRW 110.5 billion, or USD 79.56 million).

The lease agreement matures at the end of January 2030, and the annual rent is USD 4.64 million, with a 2.2% increase each year. At the time of acquisition, Hana Alternative secured a 5-year collateralized loan of USD 55 million (KRW 65.4 billion, or USD 47.09 million; interest rate of 2.9% per annum) from Hana Bank and Woori Bank's US branches, applying a loan-to-value (LTV) ratio of 62%.

Until October 2023, the dividend yield maintained an annual rate of 5.3% to 5.7%, but it sharply dropped to 1.3% per annum from November 2023 to April 2024. Since then, investor dividend payments have been withheld.

Hana Alternative publicly announced the full withholding of dividends in April 2024. This is because a settlement amount of approximately KRW 8.5 billion (USD 6.12 million) will arise if the KRW-USD exchange rate, which was KRW 1,098 at the time of the hedge contract, is extended to KRW 1,350 at its maturity in November 2025.

Since it is difficult for individuals who invested in the publicly offered fund to make additional contributions, the dividends are being used for this purpose. With the current exchange rate exceeding KRW 1,400, the settlement amount is expected to increase further. The second obstacle is the extension of the collateralized loan maturing in November.

The benchmark interest rate has risen from 0.25% at the time of purchase in 2020 to 4.5% currently, so the loan interest rate is expected to be at least 6%. The fund's maturity is April 2026.

Hana Alternative recently announced, "Although proactive sales were pursued from Q2 2024, the current market situation makes a sale impossible due to deterioration". They added, "We will pursue a sale when the market stabilizes after extending the loan maturity or converting to a new collateralized loan".

An official from a foreign asset management company stated, "Even though Samsung Electronics is a 100% tenant, the sale is difficult because the U.S. office market has not improved". He added, "The fund's maturity must be extended in April of next year".

This article was published in Corebeat on April 30, 2025.