KTB Asset Management Co. Ltd. has invested $90 million in a mezzanine debt on InterContinental Boston, participating in a $265 million refinancing package of which French bank Natixis underwrote a senior debt.
The investment with a 10-year term was made on behalf of South Korean institutional investors including an insurance company and retirement savings fund. It is expected to generate an average return in the 6% range, according to sources with knowledge of the matter on June 14.
Extell Development, the developer of the hotel, originated the loans for refinancing advised by Eastdil Secured, a real estate investment banking firm.
It was the third investment secured by a joint venture between KTB Asset and US-based real estate investment firm Rexmark in refinanced loans against overseas real estates so far this year.
The three deals amounted to around $260 million in value, compared to KTB Asset’s global alternative investments of 1.4 trillion won ($1.3 billion).
New York-based PD Properties advised KTB in all the transactions.
InterContinental Hotel Group has been managing the hotel on a 99-year lease agreement since it opened in 2006.
Given its high occupancy rate, the mezzanine debt investment seems to carry a low risk, according to the sources.
The hotel is located on Boston’s Waterfront, a central business district where the regional financial industry is concentrated. It is close to Logan International Airport and South Station, a transfer station on train, subway and bus lines.
In May, the venture between KTB Asset and Rexmark invested 100 billion won in a debt secured on Union Station in Washington D.C., following the £56.9 million ($79 million) investment in a mezzanine debt on Grosvenor House managed by Marriott International Inc. in February.
By Daehun Kim and Chang Jae Yoo
<Edited by Yeonhee Kim>