PAG acquires Grand Hyatt Seoul for $475mn Hana Financial is said to provide acquisition financing, while the site development is on focus

Translated by Ryu Ho-joung 공개 2019-11-25 08:00:00

이 기사는 2019년 11월 25일 08:00 더벨 유료페이지에 표출된 기사입니다.

Hong Kong-based private equity firm Pacific Alliance Group (PAG) is set to be the new owner of Grand Hyatt Seoul, the oldest hotel in South Korea.

PAG has signed a sales agreement with Hyatt Hotels Corporation to acquire Grand Hyatt Seoul at the end of October, industry sources said last Tuesday. It was about two months after the private equity firm was selected as the preferred bidder on a non-binding basis by the seller and Jones Lang LaSalle (JLL), the lead manager of the sale. The transaction value is about 560 billion won ($475 million), according to a source familiar with the deal.

PAG has worked with several investors for the last several months to win the deal. Local brokerage Meritz Securities provided financial advice to the private equity firm and performed due diligence on the target. Mastern Investment Management, a Seoul-based asset manager, also helped PAG from the beginning of the sale process.

But after the private equity firm was chosen as the preferred bidder in August, the competition heated up among investors, including domestic brokerages, hoping to participate in underwriting financing, with some offering competitively low interest rates and fees.

The fact that this transaction is different from usual property sales also played a role. The acquisition includes the hotel and nearby land for residential use. Following the sale, Hyatt would reportedly continue to manage the hotel under its Grand Hyatt brand, while PAG would be able to develop or sell land.

For acquisition financing, PAG is expected to use an investment vehicle managed by Seoul-based Inmark Asset Management, according to a source familiar with the deal, and Hana Financial Investment could play a leading role in the overall funding process, though the situation is fluid.

For land for residential developments, Mastern Investment Management and Meritz Securities have been rumored to partner with the private equity firm. Mastern Investment Management is a leading real estate asset manager in the country, specializing in value-add strategies. Meritz Securities is also one of the leading domestic financial firms in real estate project financing transactions.

PAG, however, could be more interested in selling land separately rather than devoting its resources to develop it, according to multiple sources from financial and construction industries.

The site is widely expected to be developed as luxury homes. A potential project to develop the site would likely draw great attention from local building companies, including both leading builders and mid-sized businesses which seek to promote their premium brand image.

(By reporter Kim Gyuoung-tae)
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