The sale of Shilla Stay Dongtan, a premium business hotel operated by South Korea’s Hotel Shilla Co., has attracted four bidders, underscoring the property’s strong demand despite its location outside of Seoul’s prime districts.
According to investment banking industry sources on Sunday, the four potential buyers are J-R AMC Co., more commonly known as JR Asset Management; BlueCove Investment Co.; and two unidentified asset managers.
The sale price of the premium budget hotel, jointly owned by Mirae Asset Global Investments Co. and Korea’s state-run pension fund, the National Pension Service (NPS), is estimated at around 100 billion won ($70 million), people familiar with the matter said.
Real estate advisory firms Avison Young Korea and Savills Korea are managing the sale process.
Mirae Asset and the NPS plan to select a preferred buyer as early as next week, sources said.
SHILLA HOTEL’S FIRST BUSINESS HOTEL UNDER THE SHILLA STAY BRAND
Shilla Stay Dongtan, Hotel Shilla’s first business hotel under the Shill Stay brand, was completed in 2013 and has since shown stable operating performance.
A 29-story structure with two basement levels and a total floor area of 24,408 square meters, the hotel houses 286 guest rooms.
Shilla Stay Dongtan has a 15-year lease and management contract with Hotel Shilla, with an option to extend the contract for an additional decade upon mutual agreement.
INVESTMENT APPEAL
While hotels outside Seoul’s core business district typically struggle to attract investor interest, Shilla Stay Dongtan benefits from its strategic positioning as it sits near Samsung Electronics Co.’s and affiliated firms’ plants and other industrial complexes.
Such corporate demand has bolstered its investment appeal, analysts said.
The region, where Shilla Stay Dongtan is located, is also expected to benefit from several industrial development projects, they said.
Samsung SDI Co., recently finalized plans to relocate some of its headquarters’ divisions to a site near Dongtan Station, while SK Hynix Inc. is set to break ground on its semiconductor cluster in the nearby city of Yongin.
With new hotel supply in the Dongtan area expected to be limited over the next few years, investor sentiment remains optimistic, industry watchers said.
By Gyeong-Jin Min
min@hankyung.com
In-Soo Nam edited this article.
