Meritz Securities Co. Ltd. has led a South Korean brokerage consortium to buy the largest hotel in Austria, Hilton Vienna, for $375 million which is expected to deliver better returns than their recent debt investments’ in US hotels.
Hana Financial Investment Co. Ltd. and NH Investment & Securities Co. Ltd. participated in the consortium which recently signed a definitive agreement on the acquisition, according to investment banking sources on July 10.
The three brokerage companies will invest around 200 billion won ($170 million) in the equity interest in the five-star hotel.
They will sell them down to domestic institutional investors through a fund launched by Seoul-based Mastern Investment Management Co. Ltd. for an expected annual return of around 7.5%.
The remainder of the cost will be financed through financial institutions and management companies in Europe.
The investment compares with recent debt investments made by South Korean brokerage firms in US hotels for expected annual returns of 5-6%.
Hilton Vienna is located in the central business district of the city, where international organizations such as the United Nations and the OPEC are headquartered.
Last year the hotel giant renewed a master-lease agreement for 20 years with a 10-year tenant renewal option.
Of the sale proceeds, $75 million will be spent on the hotel’s remodeling.
The seller, reportedly an Austrian real estate investment manager, will be compensating for any operating losses expected to incur during the remodeling period which is to last for a year.
By Hyunil Lee
<Edited by Yeonhee Kim>
(Photo: Getty Images Bank)