Korean firms invest $52.5 mn in debt refinancing of US building

Two South Korean financial institutions have invested $52.5 million in mezzanine debt backed by an office building in Manhattan, which was issued to refinance part of a $95 million loan provided by Citigroup, according to a local media report.

An unidentified Korean insurer and a financial institution acquired the debt via a five-year fund set up by South Korea’s KTB Asset Management Co. Ltd. The fund is expected to deliver an annual return of between 3.5% and 4.0%, edaily reported.

A KTB source confirmed on June 1 the deal was closed in May.

The Citigroup mortgage was lent for the $206 million transaction of the building at 95 Morton Street last April. RFR Realty, a New York-based property investment firm, bought the property from another US real estate investment firm Brickman.

The $95 million mortgage was split into a $60 million A-1 note and $35 million A-2 note, the Commercial Observer newspaper reported in April

Online payment service provider PayPal Inc. moved to the eight-story building in 2015 on a 12-year contract. Other tenants include branding firm VSA Partners Inc.

Built in 1911, the 20,000-square-meter property is close to the Hudson River on Manhattan’s west side.

It is fully leased, and only 4.3% of the existing lease contracts will mature during the five-year investment period for Korean investors, edaily added.

The deal was sourced directly through Citigroup.

Write to Daehun Kim at daepun@hankyung.com