Mirae Asset buys $95 mn debt on Blackstone-owned Cosmopolitan hotel

  • 2018-01-05

Mirae Asset Daewoo Co. Ltd., the brokerage arm of South Korea’s leading mutual fund house, has bought a $95 million mezzanine debt on the Cosmopolitan of Las Vegas owned by the Blackstone Group, as the private equity firm was reportedly raising $1.8 billion in a new refinancing package on the hotel and casino.

Blackstone was expected to use most of the proceeds to pay off $1.55 billion borrowings made in late 2016 and replace with a lower interest rate loan ahead of maturity, according to US media reports in November 2017.

Mirae Asset, part of Mirae Asset Financial Group, has completed the payment for the floating-rate mezzanine note with a maturity of up to seven years, the company said on Jan. 4. It is expected to sell it down to other domestic investors.

In late 2016, Hyundai Investments Co. Ltd., a South Korean asset manager, collected 93 billion won from South Korean institutional investors to invest in floating-rate mezzanine debt on the Cosmopolitan hotel and casino.

The mezzanine tranche, part of the $1.55 billion package, was expected to deliver an annual return of 5 to 6%. It was paid off late last year before maturity, according to industry sources in Seoul.

Blackstone bought the Las Vegas hotel from Deutsche Bank for $1.73 billion in 2014. Since then, its property value soared to $2.9 billion thanks to sharp increases in occupancy and room rates after $200 million renovation in 2016, according to industry sources.

Separately, Mirae Asset Daewoo will raise 700 billion won in fresh capital to finance global expansion and mergers or acquisitions, it said in a regulatory filing on Jan. 4.

After the rights offering, its equity capital will likely exceed 8 trillion won ($7.5 billion), nearly twice as much as those of the country’s four other big securities firms – Samsung, Korea Investment, NH Investment and KB.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>