Hana Alternative Asset Management Co. Ltd. has arranged a $50 million loan investment in the largest residential development under construction in Boston for two South Korean insurance firms, marking the first such deal sourced by a domestic asset manager.
The investment in a mezzanine debt on Echelon Seaport, a three-tower mixed-use $950 million complex in the Seaport district, comes as South Korean institutional investors are seeking to diversify into opportunistic investments beyond high-valued safe assets.
The $50 million loan is part of the $300 million mezzanine tranche originated by Los Angeles-based developer Cottonwood Management for the construction, according to South Korean news outlet Financial News last week.
Another media edaily reported that Hana, an affiliate of leading South Korean lender Hana Bank, directly sourced the investment, skipping middlemen, to save costs.
Hana Alternative confirmed the reports.
Two small-sized domestic insurers – ABL Life Insurance Co. Ltd. and Heungkuk Life Insurance Co. Ltd. – participated in the loan investment.
“Because it is rare that working-level officials (of an asset manager) are directly involved in the deal sourcing to originating, we decided to invest. If it leads to a successful exit, we will increase these types of investments,” a source at one of the two insurance companies was quoted as saying by the edaily.
The 3.5-acre development will comprise apartments, luxury condominiums, and retail and restaurant space by 2020.
“Domestic institutional investors, which had focused on loan refinancing in the US, began to show interest in pre-completed projects,” an asset management source told the edaily.
“As demand for opportunistic investment is rising as an alternative to high-valued safe assets, it is likely that investment in pre-completed properties abroad will gradually increase.”
Last year, Natixis led a 54-month syndicated loan of $480 million to finance the construction.
Hana plans to continue cooperation with Cottonwood to source new investments.
By Daehun Kim
<Edited by Yeonhee Kim>
(Photo: Getty Images Bank)
(Amended on March 7 to delete lines containing expected yields and details about pre-construction sales at the request of a company source.)