Banking on Trump administration, South Korea wealth fund targets U.S. hotels


Foreign capital's taste for U.S. hotel assets is unabated. The latest is from South Korea sovereign wealth fund Korea Investment Corporation (KIC), which, in combination with Local Finance Association (LOFA), will reportedly invest 153 billion won ($130.8 million) in seven hotels in major cities, in states including Arizona, California and Texas, reports say.

As South Korea's PulseNews writes, the investment is being made on expectations for growth in the U.S. economy under the incoming Trump administration.

KIC will reportedly put up 130 billion won with the remaining 23 billion won by LOFA.

Hotels mentioned are luxury brands including Four Seasons Hotels and Resorts, Fairmont Hotels and Ritz-Carlton.

As Pulse points out, "the joint investment will be made by purchasing mezzanine debt backed by the hotels with expected annual returns between 7 and 8 percent."

An unnamed official from the investment bank industry told Pulse that "private consumption is expected to grow in the U.S. if the incoming Trump administration keeps its election pledges, pushing forward various infrastructure investments and tax cuts, and the growth-sensitive hotel industry would be the biggest beneficiary from the economy recovery."

The Korea Investment Corporation was established in 2005 to preserve and enhance the long-term purchasing power of South Korea's sovereign wealth. It had a net asset value of USD$91.8 billion as of the end of 2015.

The Local Finance Association was established in 1964 as a financial aid provider for local government in Korea.