Brookfield taps ARA Korea as preferred bidder for Conrad Seoul

Canada’s Brookfield Asset Management Ltd. has selected Seoul-based real estate manager ARA Korea Ltd. as the preferred bidder for five-star hotel Conrad Seoul for around 430 billion won ($324.5 million), banking sources said on Thursday.

With the highest bid price, ARA Korea was chosen among bidders including New York-headquartered Blackstone Inc., Singapore’s Keppel Ltd. and Seoul-based Gravity Asset Management Inc., sources added.

Brookfield owns the International Finance Center in Seoul (IFC Seoul), comprised of the luxury hotel, three office towers and a shopping mall. The Canadian investment firm is set to sell the buildings in phases as divesting of the combined assets is tough in the current market.

Brookfield has been in the process of increasing its debt on IFC Seoul to 2.70 trillion won from the current 2.28 trillion won through refinancing. The selected buyer of Conrad Seoul is expected to take over a portion of the loan.

If ARA Korea acquires the hotel, the real estate firm will need to raise at least 10% of the purchase price from overseas investors under Korea’s Foreign Investment Promotion Act. All of the IFC is subject to the law, which requires foreign capital to invest 10% or more of the sale price.  

Brookfield bought IFC Seoul for 2.55 trillion won in 2016, with 750 billion in equity and 1.8 trillion won in debt. The investment firm is set to recover its equity investment via its second debt refinancing following the first one in 2019.  

In May 2022, the Canadian investment manager tapped Mirae Asset Global Investments Co. as the preferred bidder for IFC Seoul valued at 4.1 trillion won.

But the deal broke down in September 2022 as the Korean government rejected Mirae Asset’s financing plan, saying the scheme was heavily dependent on borrowing and could hurt its investors. 

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com

Jihyun Kim edited this article.