[Funding] Aegis Asset Management Raises 1.4 Trillion KRW for Acquisition and Development of Namsan Hilton Hotel

The Millennium Hilton Seoul Hotel, which had been located at the foot of Namsan in Seoul for nearly 40 years, is disappearing into history. After being acquired by a domestic real estate fund management company for about 1 trillion won, it will be demolished and an office building will be constructed on the site. The Millennium Hilton Seoul Hotel as of May 25, 2021.
Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Park Soyeon] Aegis Asset Management has raised approximately 1.44 trillion KRW in funds to be used for the acquisition and development of the Namsan Millennium Hilton Hotel.

According to the investment banking (IB) industry on the 24th, Aegis Asset Management recruited a lending syndicate through the project finance vehicle (PFV) YD427, divided into senior debt of 840 billion KRW, mezzanine debt of 400 billion KRW, and subordinated debt of 200 billion KRW. Shinhan Financial Investment acted as the lead manager.

The collateral includes the Hilton Hotel site and others. Hyundai Engineering & Construction, which invested some equity and took on the role of the construction company, provided joint guarantees for the subordinated loans. The lead manager, Shinhan Financial Investment, also provided some credit support. The raised funds will be used to pay the acquisition price to the largest shareholder, CDL Hotel Korea, and the remainder will be used for construction costs and other project expenses.

Aegis Asset Management signed a contract last year to purchase the Millennium Hilton from CDL Hotel Korea for about 1.1 trillion KRW. This was the highest price for a building sale in Korea last year.

The Hilton Hotel opened in November 1983. Since then, the largest shareholder CDL Hotel Korea took ownership from Daewoo Development under the Daewoo Group during the 1999 foreign exchange crisis and has been operating the hotel for 23 years.

Going forward, Aegis Asset Management plans to develop the Millennium Hilton into a complex facility comprising a 5-star hotel, retail facilities, and offices.

Recently, Aegis Asset Management has been focusing on business diversification by expanding into alternative investment areas alongside its existing business. In May last year, it integrated four investment divisions?domestic investment, development investment, global investment, and project finance investment?into a single investment division.

Aegis is attracting market attention with aggressive investments. Together with Shinhan Financial Group, it invested in an Amazon logistics center in the United States, earning 86.4 billion KRW in profits within one year. This was attributed to direct logistics center development instead of indirect investment through a U.S. asset manager, as well as the impact of the rising KRW-USD exchange rate, resulting in higher-than-expected returns.

Recently, it also participated in the main bidding for the sale of four Yeouido IFC buildings and the IFC Mall (totaling 85,400㎡) as part of a consortium with Shinsegae Property. Other bidders included Mirae Asset MAPS REIT, Koramco Asset Management, ARA Korea Asset Management, and Marston Investment Management. The total estimated value of the IFC is about 4 trillion KRW.