Korean building materials firm seals 4th US hotel purchase for $87 mn

  • 2018-03-22

South Korea’s construction materials company, Aju Group, closed a $87 million acquisition of a hotel near Seattle from Marriott International Inc. last week, in its fourth purchase of a US hotel.

Aju was selected as a preferred buyer of AC Hotel by Marriott Seattle Bellevue, Washington in early December 2017 and completed the payment last week, according to investment banking sources on March 20.

Aju Hotels & Resort, a unit of the small-sized South Korean business group, targeted US hotels with 200 to 350 guest rooms, a similar size of two hotels it operates in South Korea.

Its preferred locations are the west and mid parts of the US, which are expected to benefit from the shale gas boom, or could be chosen as Amazon’s second headquarters.

In contrast to its long-term investment strategy for the two South Korea-based hotels, Aju plans to enhance the value of US hotels through renovations to sell for higher prices, according to an Aju source.

Unlike private equity firms, it did not turn to institutional investors to raise capital for the US hotel purchases.

For the acquisition of the 234-room hotel in Bellevue, Aju attracted an unidentified South Korean company as a co-investor.

With its track records, Aju will attract institutional investors and other South Korean companies for future investment in US hotels.

Its US hotel deals include DoubleTree by Hilton Hotel Dallas, Texas in 2014 for an undisclosed sum; Holiday Inn San Jose – Silicon Valley for $53 million in 2015; and The Westin San Jose for $64 million in 2017.

It sold Holiday Inn San Jose for $62 million in late 2017, netting almost $10 million in profit in two years.

Aju, founded in 1960, has diversified into the hotel business in 1987 by acquiring a small-sized hotel in Seoul and Hyatt Regency Jeju in South Korea’s southernmost major island.

By Hugh YH Jeong

hugh@hankyung.com

<Edited by Yeonhee Kim>