Mirae Asset underwrites $375 mn loan on Times Square development

Mirae Asset Daewoo Co. Ltd. has extended a $375 million loan for the Times Square redevelopment in New York City, or one third of the $1.13 billion senior debt financing raised for the landmark revamp.

The South Korean brokerage firm completed the payment last week for the project, dubbed TSX Broadway, which is expected to yield at least 5% per annum, according to sources with knowledge of the matter on Jan. 27.

Its portion was reduced from the originally planned $600 million, about half of the whole senior tranche, because of competition.

“Considering its low risk of loss because the loan-to-value ratio of the project is below 50% and the land value is over $1 billion, its coupon rate is high because it was borrowed before completion,” said one of the sources involved in the investment.

The coupon rate is over 7%, which would translate into an annual return of 5% or above in terms of the Korean won.

Mirae Asset will sell down the debt to other domestic institutional investors, including Hanwha Life Insurance Co. Ltd., via Hanwha Asset Management Co. Ltd. for $225 million and Shinhan Alternative Investment Management Inc. for $150 million.

Goldman Sachs arranged the whole senior debt financing.

The revamp, which costs $2.5 billion including equity financing, involves massive renovations and expansion of the 46-story complex, including lifting the century-old Palace Theater by about 10 meters.

A giant LED screen will wrap around the corner of the tower’s podium, with the historic interior of the century-old theater being restored.

It is being jointly developed by US developers, including L&L Holding Company.

Global brands, including Samsung Electronics, Amazon, Facebook, Alibaba, Disney and Walmart, are reportedly interested in renting the revamped tower which is scheduled for completion in 2021.

Hotel occupancy rate in the Times Square area reaches 97% and advertising screen sales are expected to come to at least $20 million a year, according to the sources.

By Chang Jae Yoo

yoocool@hankyung.com

Photo: L&L Holding Company