Mirae Asset to buy Fairmont Hotel

By Choi Kyong-ae

Mirae Asset Global Investments has signed an initial agreement to acquire the Fairmont Hotel in San Francisco for 540 billion won ($450 million), people familiar with the matter said Thursday.

“I cannot specify the ongoing deal, but Mirae Asset is planning to wrap up the deal next month,” a person familiar with the agreement said, following Mirae Asset’s signing of a memorandum of understanding with a U.S. real estate fund company.

The Fairmont San Francisco, established in 1907, is a seven-story building with 591 rooms. Representatives of the hotel could not be reached for comment.

Mirae Asset Global Investments reportedly plans to raise 150 billion won from its domestic affiliates _ Mirae Asset Securities and Mirae Asset Life Insurance _ and the remaining 240 billion won from overseas lenders.

The company declined to give fundraising details.

With the stock markets undergoing volatility in recent years, Mirae Asset has been stepping up its efforts to invest in overseas properties since 2006.

As there are growing worries of a large capital flight from Korea ahead of the planned U.S. rate increase later this year, asset management companies are looking to alternatives while reorganizing their investment portfolios, which were formerly heavily focused on equities, industry people said.

Starting with its 260 billion won investment in a building in Shanghai in 2006, Mirae Asset has increased its spending to invest in properties in the U.S., Brazil and Australia.

It bought the Fairmont Orchid Hotel in Hawaii for 240 billion won in May; bringing its total investment in overseas properties since 2006 to 2.515 trillion won.

Private asset management companies are not alone in investing in overseas buildings and other properties. The state-run National Pension Service has been aggressive in that approach in recent years.

In the past five years, the NPS invested in Gatwick Airport and HSBC headquarters in the United Kingdom, U.S. gas company Colonial Pipeline and the East Link expressway in Australia, to diversify its portfolio, which was formerly focused on bonds and equities.