Seoul Dragon City Selected as Sole Negotiator for GKL Seven Luck Casino

Expectations for Increased Investor Interest in Shinhan Seobu TND REITs Listed on the 10th

[Asia Economy Reporter Minji Lee] Seoul Dragon City announced on the 2nd that it has been selected as the sole negotiator for the new business site of Grand Korea Leisure (GKL)'s Seven Luck Casino Gangbuk Hilton branch. If Seoul Dragon City acquires Seven Luck Casino, it is expected that investor interest in Shinhan Seobu T&D REITs, which incorporates Seobu T&D and some assets, will expand.

GKL received proposals for the selection of a foreigner-only casino business site on November 10. Seoul Dragon City was the sole bidder for the business site of Seven Luck Casino, located in the Millennium Hilton Hotel.

Since Seoul Dragon City submitted a sole bid, the competitive bidding did not establish and was canceled, but without going through a re-bid, the procedure was switched directly to a private contract method, and Seoul Dragon City was notified of its status as the sole negotiator. It is analyzed that most hotels in the northern Seoul area qualified for bidding are existing buildings, which would require structural changes to be suitable for future casino operations, causing a burden.

Seoul Dragon City is located in Yongsan-gu, Seoul, and is a newly constructed hotel that began operations in November 2017. From the development stage, the low floors were designed with significantly high ceiling heights, which is said to be suitable for casino facility installation. It is also overwhelming in terms of the scale of rooms and ancillary facilities capable of accommodating large crowds. Four hotels under the Accor brand (Grand Mercure, Ibis Styles, Novotel, Novotel Suites) are established, with a total of 1,700 rooms and a large convention center capable of accommodating 4,900 people.

Once a foreigner-only casino is attracted, it has a significant crowd-pulling effect and can also provide hotel promotional benefits, making it expected to serve as a strong cash cow for Seoul Dragon City. Considering that Seven Luck Gangbuk Hilton branch has been long-term established for over 15 years, an increase in building value can also be anticipated.

The acquisition of Seven Luck Casino Gangbuk Hilton branch by Seoul Dragon City is expected to have a positive effect not only on Seobu T&D but also on investor sentiment for Shinhan Seobu T&D REITs, which is scheduled to be listed on the 10th. Shinhan Seobu T&D REITs incorporates the Grand Mercure among the four hotels of Seoul Dragon City.

Previously, Shinhan Seobu T&D REITs received very high interest from institutional investors with a competitive ratio of 565:1 during the two-day institutional demand forecast held on November 17-18, and the general public offering held over three days from November 24-26 also recorded a high subscription competition rate of 155:1. A representative of Shinhan Seobu T&D REITs stated, “The average expected dividend yield over five years for Shinhan Seobu T&D REITs is 6.25%, and if you receive the public offering shares, you can receive about 8% dividends during the first 13 months after listing,” adding, “The annualized yield is 7.33%, which is more than seven times that of a one-year fixed deposit and exceeds twice the annual return of the securities market.”