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Brokerage firm Shinhan sources and lends $175 mn loan on Chicago building

Dec 04, 2017 (Gmt+09:00)

Shinhan Investment Corp. has extended a $175 million loan on a prime office tower in Chicago, a rare case in which a South Korean brokerage house sourced a lending transaction abroad and made the loan directly to the borrower.

300 South Riverside Plaza in Chicago
300 South Riverside Plaza in Chicago

Shinhan, a brokerage unit of a leading South Korean banking group, provided the five-year loan secured by a 22-story building at 300 South Riverside Plaza in the West Loop, a core business district of Chicago, to South Riverside Building LLC, the owner of the property.

It entered direct negotiations with the borrower on terms and conditions.

The loan carries a fixed interest rate of 5% per annum, according to sources with knowledge of the matter on Nov. 1.

Shinhan will restructure the loan for resale: selling senior notes to US investors and the rest to South Korean institutional investors.

The loan was originated for the borrower’s parent company to repay senior notes owed to Nasdaq-listed Optibase Ltd., a real estate investment firm, Optibase said in a regulatory filing on Nov. 28.

A subsidiary of Optibase has a 30% stake in the property. The remaining 70% is held by US private equity firm Third Millennium Group.

The 99,703-square-meter building is valued at $250 million, excluding the land. It is located on the Chicago River and close to Chicago Union Station, a rail station and Willis Tower, a landmark building in Chicago.

Shinhan’s case may indicate that brokerage houses are encroaching on the field of asset management firms, while expanding into direct lending beyond real estate equity investment. In general, South Korean institutional investors have relied on domestic asset managers to source global lending deals.

The government’s move to ease regulations on the country’s biggest brokerage firms also posed a challenge to banks.

In November, South Korea’s top financial regulator allowed five brokerage firms with 4 trillion won ($3.7 billion) or more in equity capital to provide a broader range of corporate banking services, including currency exchange services for corporate clients.

The five companies are Mirae Asset Daewoo Securities Co. Ltd., NH Investment & Securities Co. Ltd., Korea Investment & Securities Co. Ltd., Samsung Securities Co. Ltd. and KB Securities Co. Ltd.

By Daehun Kim

Yeonhee Kim edited this article

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