Three Korean banks poised to lend $200 mn to Hudson Yards project

Korea Development Bank (KDB), Shinhan Bank and Woori Bank are likely to provide $200 million in syndicated loans for the Hudson Yards project in their first participation in a large-scale project financing in one of the biggest western cities.

The three Korean lenders have decided to extend an aggregate $100 million in loans for 20 Hudson Yards, a seven-story shopping mall - $50 million by state-run KDB, $30 million by Woori and $20 million by Shinhan, according to real estate investment banking sources on July 28.

They are joining in a pool of $1.5 billion syndicated loans for the 20 Hudson Yards project, which is estimated to cost $2.28 billion. The other lenders include Deutsche Bank, Credit Agricole, Bank of China, Industrial and Commercial Bank of China, and Taiwan’s Yuanta Bank , for an annual interest rate of 5%.

US real estate developer Related Companies will take a 51% stake in 20 Hudson Yards which has a floor space of 62,000-square-meter. Ontario’s municipal employees’ pension plan will take the remaining 49%.

KDB and Shinhan are also considering making $50 million loans each for 50 Hudson Yards, a 58-story office tower to be built next to 20 Hudson Yards.

If the two banks decide to provide the loans for 50 Hudson Yards, three South Korean lenders will lend a total of $200 million for the largest US private real estate development.

The Hudson Yards project is a redevelopment program for the Far West Side of Manhattan and is estimated to cost a total of $25 billion. It is aimed at expanding the Midtown Manhattan business district by building new office towers, a hotel, a large mall and residence buildings.

With South Korean asset owners emerging as major players in the global capital market, they now started having access to high-yielding real estate projects in developed countries, one of the sources said.

Last year two Korean investment firms - Shinhan BNP Paribas Asset Management and Hyundai Investments - acquired 400 billion won of mezzanine debt issued to fund the construction of 10 Hudson Yards, the first building of the Hudson Yards project.

Apart from lending to the 20 and 50 Hudson Yards projects, Shinhan Bank is considering extending loans for 30 Hudson Yards, an 80-story office tower, according to the sources.

By Daehun Kim and Hugh YH Jeong

hugh@hankyung.com