Hanwha Asset invests $44 mn in Tokyo hotel-backed mezzanine debt

Hanwha Asset Management Co. Ltd. has made its first direct investment in Japan’s commercial property market by underwriting 49.8 billion won ($44 million) mezzanine debt on a four-star hotel near the Tokyo Disney Resort, expanding its portfolio beyond real estate investment trust (REIT) funds.

The mezzanine debt was secured on Tokyo Bay Tokyu Hotel which opened in May with 638 guestrooms. The 18-story hotel on the shore of Tokyo Bay is managed by Japan’s Tokyu Hotels which is opening new hotels ahead of the 2020 summer Tokyo Olympics.

For the debt investment, Hanwha Asset recently sold one-month electronic short-term bond (STB) of 50.2 billion won via its affiliate Hanwha Investment & Securities Co. Ltd., according to sources of the two companies on August 8.

The electronic STB is collateralized by a private fund vehicle with a term of five and a half years, launched by Hanwha Asset to fund the investment.

A Hanwha Investment spokesman told the Korean Investors that it would seek to sell down the mezzanine debt to other institutional investors later on, without elaborating further.

Asset-backed short-term bonds (ABSTB) with a maturity of less than three months have been increasingly used for project financing in South Korea since introduced in 2013.

They are free of reporting and filing requirements, unlike asset-backed commercial papers.

The unit of Hanwha Life Insurance Co. Ltd., up until recently, has expanded real estate investment in Japan via REITs which reportedly outperformed global real estate funds operated by other Korean investment firms in the first half of this year, buoyed by economic recovery and rental growth in the neighboring country.

By Jinsung Kim

jskim1028@hankyung.com