Korean insurers arrange $550 mn debt refinancing of Brookfield’s NY building

Jan 30, 2017 (Gmt+09:00)

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The two insurance arms of South Korea’s agricultural cooperative, Nonghyup Life Insurance Co. Ltd and Nonghyup Property & Casualty Insurance Co. Ltd., have lead managed and made a joint investment of $550 million with other domestic institutions in senior secured debt issued by Brookfield Asset Management for refinancing a skyscraper in Manhattan.

The debt represents the whole senior tranche secured by One World Finance Center, also known as 200 Liberty Street, owned by the alternative asset manager Brookfield, investment banking sources said on Jan. 26.

Nonghyup Life and Nonghyup Property & Casualty have enlisted about eight other Korean institutional investors for the joint underwriting.

The financing arrangement indicates that South Korean institutional investors are pursuing a more active role in the global investment market in their push into a broader range of offshore assets.

“There have been many cases in which domestic securities firms acquire overseas properties and sell them down to institutional investors such as savings funds and insurance companies, but it is rare that (domestic) insurance companies propose joint investment,” one of the IB sources told the Korea Economic Daily.

The investment will be made through a fund run by South Korea’s Kiwoom Asset Management Co. Ltd. for a period of 10 years. Payment will be completed by the end of this month, after the domestic institutions, including retirement funds, win final approval of their internal committees.

The expected return from the underwriting has edged up to 4.5% from between 4% and 4.5% during the negotiation stages, in the wake of US interest rate rises.

The prime office building, constructed in 1986, is across the street from Ground Zero and near Goldman Sachs New York headquarters. With the floor area of 151,200 square meters, the 40-story property is valued at $1 billion.

By Daehun Kim and Chang Jae Yoo

daepun@hankyung.com