S. Korean Fund Invests $79M in Blackstone-Owned Vegas Resort
- Nov 29, 2016
Las Vegas—A CRE fund raised by South Korean asset management firm Hyundai Investments Co. Ltd. has invested $79 million (93 billion won) in mezzanine debt issued for The Cosmopolitan of Las Vegas, The Korea Economic Daily reported on Friday.
The 6.7-million-square-foot, 3,000-key Cosmopolitan resort extends across 8.7 acres and in addition to its distinctive twin hotel towers encompasses a 110,000-square-foot casino, about 300,000 square feet of retail and dining space, a 40,000-square-foot fitness center and spa, a 1,800-seat theater and 165,000 square feet of meeting space.
A group of unidentified South Korean savings fund and insurance companies participated in the Hyundai fund with a two-year maturity that can be extended by up to five years. The investors will receive floating interest rates on a monthly basis and are expected to earn an annual return of about 5–6 percent, according to The Korea Economic Daily.
The Korean investment reportedly accounts for about 20 percent of mezzanine debt that Blackstone Group issued for The Cosmopolitan’s refinancing.
Hyundai, a wholly owned unit of Hyundai Marine & Merchant Insurance Co. Ltd., also has invested in Park Avenue Tower in Manhattan, another Blackstone property, in addition to other U.S. CRE assets.
Back in 2014, Deutsche Bank’s sale of The Cosmopolitan to Blackstone Real Estate Partners VII for $1.73 billion was one of that year’s largest single-asset transactions.
The Korea Economic Daily described the Hyundai fund as “joining the ranks of other [Korean] institutions in making a dash for senior and mezzanine loans abroad.”
As tougher regulations on South Korean banks left a void in the high-yielding financing market, the KED article explained, institutional investors there “are ramping up investments in senior and mezzanine loans secured by overseas properties in search of better yields. Amid the views that U.S. office building prices have shot up in core cities, Korean investors are now zooming in on second-tier cities and other types of real estate such as student housing and parking towers.”
Commercial Property Executive was unable to reach Hyundai Investments for further information.