KTB Asset Management Co. Ltd. has invested an undisclosed amount in a debt secured on Union Station in Washington D.C. on behalf of three South Korean institutional investors, in its second investment in refinanced loans originated by New York-based Ashkenazy Acquisition Corp. (AAC).
AAC, founded by real estate tycoon Ben Ashkenazy, has a long-term lease of Union Station and sold the loan to refinance maturing debt against the property, according to insurance industry sources on May 11.
The 10-year investment deal is the second transaction sealed by a joint venture between KTB Asset and US-based real estate investment firm Rexmark with AAC. It was closed this week.
In February, the venture executed a £56.9 million ($79 million) investment in a mezzanine debt on Grosvenor House managed by Marriott International Inc. for three South Korean institutional investors. The debt was part of a refinancing package for the hotel by its owner AAC.
It invested nearly $180 million for both transactions in the form of debt, for which target returns were not disclosed.
Over the last year, the joint venture has closed four transactions across different asset classes in New York, Boston, Washington, and London and all were done directly with the borrowers in off-market transactions.
New York-based PD Properties has advised KTB in all the transactions.
Union Station functions as the main transportation hub and serves local and regional transportation including the METRO, Amtrak, MARC and VRE commuter railroads. It is also the main bus terminal of Washington, D.C.
The transaction marked the latest in a string of investments by the South Korean asset manager, a majority owned by KTB Investment & Securities Co. Ltd, in mezzanine debts against overseas properties.
“We have been expanding networks with AAC for real estate investment in the US and Europe. We will focus on mezzanine debts, rather than equity investments which carry higher risk, to provide stable investment vehicles to institutional investors,” Hakku Lee, executive vice president of KTB Asset, was quoted as saying by the Maeil Business Newspaper on May 10.
KTB Asset manages 2.4 trillion won in alternative assets, 54% of which is invested abroad.
AAC has a $12 billion portfolio of real estate assets in the US, Britain and Canada, including landmark properties such as the Plaza Hotel and Barneys store building in New York.
By Daehun Kim
<Edited by Yeonhee Kim>
Photo: Getty Images Bank
(Modified on May 15 to drop some details about the deal size and the type of loan because of confidentiality agreement between the borrower and the lender.)