Shinhan sources $100 mn debt investment in US hotel portfolio

Shinhan Financial Group’s alternative investment arm has sourced a $100 million investment by three South Korean insurers in a mezzanine debt on US hotels, which is part of Atrium Holding Co.’s $750 million debt refinancing on a portfolio comprising 29 hotels.

The mezzanine debt has higher seniority than other mezzanine notes in the debt package and is expected to produce annual returns in the 7% range for an investment period of up to seven years, according to investment banking sources on March 2.

Shinhan Alternative Investment Management Co. Ltd., formerly Shinhan Private Equity Inc., recently closed a domestic fund of funds for the investment in the variable-rate debt, amid heightened expectations of US interest rate hikes.

Hana Financial Investment Co. Ltd., a brokerage house, had underwritten the debt and resold them to the insurers through the Shinhan vehicle.

The sources declined to identify the three South Korean insurance firms involved in the investment.

For the debt refinancing, Atrium Holding, which owns Atrium Hospitality, secured a $600 million loan from three banks - Goldman Sachs, Citigroup and JPMorgan Chase, along with $150 million of mezzanine financing, according to Asset Securitization Report in December, a news outlet.

The portfolio includes Hilton, InterContinental, Marriott and other branded hotels across the US, which are valued at $1 billion.

Shinhan Alternative, launched in November, arranged a $190 million debt investment in One Worldwide Plaza, a landmark office building in New York, late last year.

It recently closed a domestic fund of $280 million to invest in a US middle-market private debt fund of Antares Capital LP. Eight South Korean institutional investors, including the Public Officials Benefit Association and the Police Mutual Aid Association, participated in the fund.

Shinhan Alternative is headed by Heesong Kim, a former investment head of Shinhan Life Insurance Co. Ltd.

Its parent group Shinhan Financial has combined IB operations of its four units and launched the Global Investment Banking division last July to boost alternative investment.

By Daehun Kim

daepun@hankyung.com

Photo: Getty Images Bank

(Modified on March 5 to clarify that Shinhan Alternative Investment Management sourced the debt investment and Hana Financial Investment underwrote the debt for resale to three South Korean insurers.)