South Korean firm buys debt on Cosmopolitan of Las Vegas

Mirae Asset Daewoo Company, the brokerage arm of one of South Korea’s leading mutual fund houses, has bought $95-million in mezzanine debt on the Cosmopolitan of Las Vegas, which is owned by the Blackstone Group. The private equity firm was reportedly raising $1.8 billion in a new refinancing package on the hotel and casino.

Blackstone was expected to use most of the proceeds to pay off a $1.55 billion debt from late 2016 and replace with a lower interest rate loan ahead of maturity.

Mirae Asset, part of Mirae Asset Financial Group, has completed the payment for the floating-rate mezzanine note with a maturity of up to seven years, the company said. It is expected to sell it down to other domestic investors.

In late 2016, Hyundai Investments Co. Ltd., a South Korean asset manager, collected 93 billion won from South Korean institutional investors to invest in floating-rate mezzanine debt on the Cosmopolitan hotel and casino.

The mezzanine portion, part of the $1.55 billion package, was expected to deliver an annual return of 5 to 6 percent. It was paid off late last year before maturity, according to industry sources in Seoul.

The Las Vegas-based Cosmopolitan hotel and casino was first purchased by Blackstone from Deutsche Bank in a $1.73-billion acquisition deal back in 2014. According to industry reports, over the years after the deal was completed, the value of the property rose to a little less than $3 billion due to the massive boost in room and occupancy rates after a renovation process estimated at $200 million was completed in 2016.