South Korean investors, on the hunt for higher returns and asset diversification, are making their way into U.S. real estate debt with renewed eagerness. More, in fact, than investors from any other country.

As of mid-April, investors based in South Korea accounted for 21% of foreign investment in domestic commercial real estate debt, Preqin data shows.

For example, the Wall Street Journal reports KTB Asset Management recently refinanced 285 Madison Ave. in New York for RFR Holdings, while IGIS Asset Management provided $220M for 787 Seventh Avenue. Both KTB and IGIS are deep-pocketed South Korean investors.

South Korean investors are attracted to the yields that U.S. real estate debt offers compared with what they can get at home, especially as U.S. interest rates rise. That interest remains robust despite the perception that the current real estate cycle will soon run its course and property prices might quit rising or even fall in the relatively near future.

The thinking is that even during a downturn in the market, debt provides more of a cushion for lenders than equity. In most cases, property prices need to decline significantly, depending on the loan-to-value ratio, before a lender is impacted.

Besides direct loans to property owners, South Korean insurers and asset managers have been seeking U.S. CMBS and are looking for debt funds in this country to partner with, such as M360 Advisors, a CRE debt fund based in California. According to the fund, it has raised $150M for a South Korean institutional investor over the past year.

Koreans are not the only non-U.S. investors eager to get into American CRE debt. Canada and Australia have the second- and third-largest share of such debt, at 12% and 11%, respectively. Altogether, foreign investment in U.S. real estate debt spiked from $10.8B in 2016 to $17.8B in 2017, according to Preqin.