Ascendas buys $69 mn Seoul hotel from KTCU-backed fund

  • 2018-11-30

Singapore’s Ascendas Hospitality Trust has acquired a hotel in downtown Seoul for 77.5 billion won ($69 million) from a South Korean real estate fund backed by Korean Teachers’ Credit Union (KTCU) and tobacco maker KT&G Corp,  according to Ascendas’ announcement on Nov. 29.

The acquisition price for ibis Ambassador Seoul Insadong is little changed from the 75 billion won paid by Seoul-based Richmond Asset Management’s trust fund in 2013 to buy the 363-room hotel, shortly after the construction completion.

KTCU had reportedly invested 30 billion won in the vehicle as the biggest limited partner, and KT&G, short for Korean Tobacco & Ginseng Corporation, injected 10 billion won. Richmond Asset financed the remaining cost with secured loans.

It was priced at a 3.1 per cent discount to its latest valuation for a net property income yield of 4.6 per cent, according to the Business Times.

The 12-story hotel is operated by Ambassador Hotel Group under a master lease agreement.

The transaction was the second hotel acquisition in Seoul by the Singapore-listed fund, after it bought four-star Splaisir Seoul Dongdaemun hotel for 72.1 billion won from a Korean developer in April of this year.

It signed a long-term agreement with Japan’s Sotetsu Hotels to lease the 215-room hotel for up to 20 years for a monthly rent of 262.5 million won, starting from July of this year.

Their locations close to tourist attractions and business districts underpinned the acquisition decisions, with rising inbound tourists.

Ascendas-Singbridge Group, parent of Ascendas Hospitality Trust, has been an aggressive foreign investor in South Korea’s real estate market since 2002.

It bought a mid-sized new office building in the up-scale Gangnam district of Seoul for S$124.3 million in November 2017, just after selling an office tower for $635 million to a South Korean asset manager backed by the National Pension Service in July of the year.

Ascendas-Singbridge Group is jointly owned by two Singapore’s state-owned companies – Temasek Holdings and JTC Corporation- and manages over $15 billion in assets.

<Edited by Yeonhee Kim>