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[Deal Broker] Ex-ATM vendor behind Korean investors’ global real estate push

Aug 13, 2018 (Gmt+09:00)

Union Station in Washington D.C., InterContinental Boston and luxury hotel Grosvenor House in London are among the landmark commercial buildings that have attracted South Korean institutional investors for their loan refinancing packages this year.


All the three buildings are owned by New York-based Jewish real estate tycoons.


What is more, the debt investment deals were arranged by PD Properties LLC, a real estate agency based in New York.


Co-founded by Korean-American Tony Park and Israeli-American Elad Dror in 2008, the leasing broker has recently expanded into the field of property investment brokerage, taking advantage of growing interest among South Korean insurance companies and pension funds in global real estate assets.


It matched South Korean institutional investors with developers and landlords, especially Jewish real estate giants, who want to refinance loans with cheaper credit as US interest rates are rising.


For South Korean investors in pursuit of stable cash flows, PD Properties sourced deals that had not been shared with non-mainstream investors before. It handles only proprietary deals which tend to have high deal certainty.


Enhancing its appeal as a real estate broker further, it hires no financial broker such as Goldman Sachs and Morgan Stanley, so the investors can boost annual returns by about 1% point, according to Park.


For deal sourcing, it works in partnership with Rexmark LLC, a US real estate investment manager, founded by Michael Rebibo.





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Tony Park (right) and Elad Dror

STARTING WITH ATM


Park, 42, started his business with one automatic teller machine (ATM) in Koreatown in New York, several years after he came to the US empty handed at age 20.


Born in Sicily, Italy, of Korean parents, Park took the ATM from his former business partner, after their co-invested restaurant in Philadelphia was burned down.


“I asked him to give me the ATM installed at the store, instead of the promised 20% interest (in the restaurant),” he recalled.


With changes in banking regulations that allowed ATM owners to charge a fee for the use of their machines, Park pocketed $1,000 a month from the single ATM.


With student loans and surplus money, he bought as many as 6,000 ATMs in five to six years for resale, until he had to close the business due to the credit card boom in the early 2000s.


CHANGING COURSE


It was the $10,000 commission he received for working on a lease contract as an interpreter that led him to embark on the real estate career. Out of a job, he interpreted for a Korean deli shop operator, one of his ATM clients, to sign a lease with a new landlord.


“How much on earth do you make to give me such a big money? I asked the property broker who accompanied the landlord, and his answer was: 450,000 dollars in commission,” Park said.


“It amounts to four to five months’ rent. I began to study for real estate license the next day.”


Park built relationships with high-profile Jewish property developers such as Ben Ashkenazy, Joseph Chetrit and David Werner, with the help of business partner Dror. The Israeli American had previously worked for the Moinian Group, a New York-based real estate broker.


From 2013, PD Properties expanded its client base to South Korean companies, ranging from Paris Baguette, a South Korean bakery franchise, to cosmetic brands such as Nature Republic, The Face Shop and Tonymoly and a South Korean dental chain, helping them to open outlets in New York.


“Steady rents paid by Korea’s blue-chip companies helped raise the value of the buildings and their profiles in New York property market, too,” Park said.


It also offered a consulting service for Lotte Group to fill retail space at Lotte New York Palace on Madison Avenue which the South Korean retail giant acquired in 2015.


EYES ON EUROPE


With South Korean pension funds and insurers increasing appetite for cross-border alternative assets, PD Properties arranged a $102 million debt investment for KTB Asset Management Co. Ltd. in 2017, its first property investment brokering for a South Korean institutional investor. The debt was secured against a high school-leased building in Manhattan owned by Joseph Chetrit.


To source deals for South Korean clients, PD Properties is zooming in on US buildings leased to government institutions under a long-term agreement, while expanding its presence into London, Italy, France, China and Turkey.


“Now, we focus on Europe’s property market in which South Korean investors are showing strong interest,” Park added.


By Chang Jae Yoo


yoocool@hankyung.com


Yeonhee Kim edited this article

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