Huge project involves building multiplex facilities including hotel, office and shops at cost of $2.5 bln with $11.5 bln in loans and the rest in equity
Chairman Park Hyeon-joo of Mirae Asset Daewoo Group. (Photos: Mirae Asset Daewoo)
A bird’s eye view of the TSX Broadway Project for a 46-storey multiplex building including a hotel, offices and shops on the site of a 106 -year old theater in Broadway in New York in which Mirae Asset Daewoo invests $375 mln.
Mirae Asset Daewoo will invest $375 million, or 420 billion won, in the TSX Broadway Project to be built on the old site of the 106-year old theater. The project consists of a 46-storey multiplex building for a hotel, offices and shops.
The project also involves lifting the theater facilities up 10 meters off the ground and preserve them as a theater.
Financial investment sources said on Jan. 26 that Mirae Asset Daewoo already paid for the investment in the Broadway project, which is led by such investors as L&L Holdings and other leading U.S. developers.
Mirae Asset Daewoo plans to resell the stakes in the Broadway project to Korean institutional investors.
Hanwha Asset Management and Shinhan Replacement Investment Management have already been put in charge of running the fund for Mirae Asset Daewoo.
The ambitious project is scheduled to be completed in 2021, which is to be built on the site where the Palace Theater is located in Times Square. They will not demolish the theater opened in 1913, but will instead lift it 10 meters off the ground so that exhibit halls and commercial facilities can be built on the ground and the second floor of the 46-storey building.
In the upper levels of the building, some 669 hotel rooms will be built with large LED ad screens surrounding the low levels of the building.
Already such large advertisers as Samsung Electronics, Amazon, Facebook, Alibaba, Disney and Walmart have shown interest in displaying their ads on the building when it is completed, recent reports in New York said.
The building would cost around $2.5 billion, including equity and loans with Goldman Sachs taking care of $11.3 billion in securing loans. Mirae Asset Daewoo will take charge of part of the loans.
Those involved in the deal said the loans would be less than 50 percent of the total cost, while the price of land has been valued at $1 billion, with a low risk for default, although the interest rate charged for the loans is high as they are released before the completion of the project at around 7 percent per annum.
The investors are likely to earn around 5 percent on their investment, even when the cost for foreign exchange hedging is set aside. Mirae Asset Daewoo first thought about going after a bigger share of the loans, but was only able to secure $375 million of the total loans amid tough competition with Goldman Sachs winning the rest of the loans.
The hotels in and around Time Square enjoy the 97 percent occupation rate year-round with profits from the electronic ad screens estimated to be around $20 million annually. Chairman Sohn of Softbank, a well-known Japanese investor who is a Korean, was said to have made an investment in the TSX Broadway Project.
Mirae Asset Daewoo invested 500 billion won in its Hong Kong affiliate by buying its new shares to increase its capital, with the fund the company got from the sale of its shares in its British subsidiary to prepare for Brexit, the company said on Jan. 17.
The capital of the Hong Kong subsidiary will rise from 1.443,8 trillion won to around 2 trillion won when the move is completed.
The capital of British subsidiary will be reduced to 315.3 billion won from 651.3 billion won when the sale of the 300 million of its shares is completed. Officials of Mirae Asset Daewoo said uncertainty in the EU market has been rising due to Brexit while the diverse business chances in Hong Kong have been growing.