Meritz Financial Affiliates Join PF Lenders
Construction to Start in April 2025, Completion Targeted for 2029
Meritz Financial Group, Hyundai Engineering & Construction, and Maston Asset Management have completed project financing (PF) funding worth 880 billion KRW for the development project of the former Gangnam Le Meridien Hotel site. The plan is to start construction in 2025 and, after a four-year construction period, build a complex facility including offices, a hotel, and residential facilities.
According to the investment banking (IB) industry on the 3rd, Maston116ho Gangnam Premier Project Finance Investment Co., Ltd. (Maston116ho) recently secured a credit line loan of 880 billion KRW with Meritz Securities and others as lead managers. Maston116ho is a project special purpose vehicle (PFV) established for the Le Meridien Hotel site development project. The project was established with equity contributions from the developer Wells Advisors (55%), Hyundai Engineering & Construction (29.99%), Maston Investment Management (5%), Meritz Securities (4.01%), Meritz Fire & Marine Insurance (3%), and Meritz Capital (3%).
The PF loan was executed in tranches according to collateral and repayment priority: senior tranche of 530 billion KRW, mezzanine tranche of 200 billion KRW, and junior tranche of 150 billion KRW. The loan maturity is one year, with plans to refinance after one year. Insurance, securities, and capital companies affiliated with Meritz Financial Group, as well as Ebest Investment & Securities, participated in the PF lending consortium. Additionally, Hyundai Engineering & Construction, the contractor, provided joint guarantees for the PF loan.
The lending consortium stipulated that if Hyundai Engineering & Construction’s credit rating falls to A- or A2- or below, they may declare an event of default (EOD). Hyundai Engineering & Construction’s current credit rating is AA-, meaning it would need to drop three notches to trigger an EOD, so the likelihood of an EOD is considered very low.
The Gangnam Le Meridien Hotel development project involves constructing a complex facility ranging from seven basement floors to 31 above-ground floors on a hotel site of 10,362.5 square meters (approximately 3,140 pyeong) located at 602 Yeoksam-dong, Gangnam-gu, Seoul. The complex will include offices, a hotel, commercial and neighborhood facilities, urban-style residential housing, and officetels.
Hyundai Engineering & Construction aims to begin construction in April 2025 after completing Seoul city’s permit procedures. The construction period is about four years, with completion planned around 2029. An IB industry official said, "The Le Meridien Hotel site is located in a prime area of Gangnam, Seoul, adjacent to Sinnonhyeon Station on Subway Line 9 and the Shinbundang Line, so both residential and commercial facilities are expected to be successfully sold," adding, "The project’s profitability was high, so there was no significant difficulty in attracting PF loan investors."
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