Aegis Asset Management Secures 720 Billion KRW for 'Seoul Station Mega Mixed-Use Development' Building Acquisition

Use of Acquisition Funds for Seoul Tower and Metro Tower
Large-Scale Complex Development Planned Together with Hilton Hotel
Project to Begin as Early as This Year

A project finance vehicle (PFV) established through investment by Aegis Asset Management and others has raised 720 billion KRW to promote a large-scale complex development near Seoul Station. The funds will be used to acquire two buildings, Seoul Tower and Metro Tower, which are adjacent to the Millennium Hilton Seoul Hotel (Hilton Hotel). The plan is to bundle these two buildings with the Hilton Hotel, whose ownership has already been secured, to push forward a large-scale complex development project.

Millennium Hilton Seoul Hotel

According to the investment banking (IB) industry on the 18th, ‘YD816 Project Finance Company (PFV)’ recently received a secured loan of approximately 717 billion KRW from a consortium of financial institutions. The Seoul Tower and Metro Tower located on Toegye-ro across from Seoul Station were acquired by providing the buildings and land of the two towers as collateral. YD816 PFV is a special purpose vehicle established by Aegis Asset Management to carry out a complex development project near Seoul Station.

The entire loan was executed in tiers?senior, mezzanine, and junior?based on the priority of collateral rights and repayment order among the consortium members. Commercial banks, securities firms, insurance companies, and capital firms participated as major investors. In the securities industry, Daishin Securities, Shinhan Investment Corp., and NH Investment & Securities are known to have executed mezzanine loans.

The PFV will use these funds for acquiring Seoul Metro Tower and Seoul Tower as well as for initial project costs related to the development. Metro Tower was formerly the GS Construction headquarters, and Seoul Tower was used as the Daewoo Foundation Building. An IB industry insider stated, "The acquisition contract for the two buildings was signed last year, and after paying the interim and final payments with the raised funds, the process of transferring ownership registration is underway."

Another PFV funded by Aegis Asset Management, ‘YD427 PFV,’ has already secured ownership of the Hilton Hotel. At the end of 2021, it acquired the hotel site and building from the previous owner, CDL Hotel Korea. The plan is to demolish the Hilton Hotel and develop two office and retail buildings ranging from nine basement floors to 20 above-ground floors on the site. Hyundai Construction is in charge of construction.

The developers have not yet obtained the necessary permits for the complex development. Currently, the permitting process is underway for the Hilton Hotel redevelopment project first. The amendment to the maintenance plan was approved with modifications by the Seoul City Urban Planning Committee’s subcommittee in November last year. Approvals for project implementation plans and building permits remain. If the permits proceed on schedule, construction could begin as early as this year.

A consortium representative said, "Once permits are completed, we will secure trillion-won scale PF loans for construction and project costs and begin full-scale construction," adding, "With the opening of the GTX-A line, the complex development projects near Seoul Station will gain momentum."

Currently, to the north of Seoul Station, the Hanwha Group consortium is also promoting the Seoul Station North Station Area development project as a private venture. On a large railway site, a complex including exhibition and convention facilities, hotels, and offices will be built with six basement floors and up to 38 floors above ground across five buildings, totaling 350,000 square meters. This is the largest convention (MICE) complex development project in northern Seoul. The Hanwha consortium has previously raised a 740 billion KRW bridge loan through a special purpose company (SPC).

An IB industry insider predicted, "Several large-scale complex development projects near Seoul Station will consecutively raise large-scale main PF loans ahead of construction," and added, "Financial companies will fiercely compete to underwrite large-scale development projects with strong business viability."