A year after investing KRW 200 billion (approx. USD 145 million) in the Conrad Seoul Hotel, Japan’s Sumitomo Mitsui Group has sold its entire stake — a swift turnaround that has stirred curiosity in the Korean real estate market.

According to investment banking sources on October 29, Sumitomo sold an equity portion worth about KRW 50 billion to M&G Real Estate earlier this year and recently disposed of the remaining KRW 150 billion stake to Singapore’s sovereign wealth fund GIC.

Although the exact sale price remains undisclosed, industry insiders suggest that the transaction generated little to no capital gain.

Market participants who initially viewed Sumitomo’s move into the Conrad deal as part of a broader “Japanese capital entry” into Korea are now puzzled by the rapid exit and the absence of visible profit.

Behind the scenes, attention is turning toward ARA Asset Management, which acquired and currently manages the Conrad Seoul.

Sumitomo was the lead investor in ARA’s USD 500 million strategic equity financing in 2021, becoming a key shareholder with substantial influence over the company’s direction. The partnership was intended to support ARA’s global expansion and strengthen its asset management capabilities — a move that would naturally benefit Sumitomo as a shareholder.

For ARA, scaling up assets under management (AUM) is crucial to growing management fee income. The acquisition of the Conrad Seoul was a significant boost in that regard.

In August 2024, ARA purchased the Conrad Seoul from Brookfield Asset Management for KRW 415 billion. Sumitomo invested KRW 200 billion into the acquisition fund, effectively becoming the sole equity investor and beneficiary.

The investment gave ARA another sizable asset under its management umbrella, generating fee income and enhancing its operating platform.

With Sumitomo now transferring its entire equity stake — first to M&G and later to GIC — ARA will continue to earn management fees from these new investors.

Having fully recouped its principal, Sumitomo is reportedly preparing for its next transaction.

A market observer commented, “Sumitomo’s move seems less about betting on the Korean hotel sector and more about strategically expanding ARA’s platform. Rather than making a direct market play, Sumitomo’s role was likely to provide initial acquisition capital to seed an ARA-managed fund.”