Asian, European buyers get active in L.A.

Acquisition trend to continue through end of year

With L.A.-area real estate prices still ratcheting downward, investors from Asia and Europe are snatching up an increasing number of local properties. Foreign firms recently purchased several high-visibility properties in L.A. County, and sources said the acquisition trend will likely continue through the rest of this year.

Among the Asians, the most active investors in L.A.-area real estate have been the Taiwanese, Korean and, to a lesser extent, Hong Kong companies. Across the Atlantic, meanwhile, industry sources cited the Dutch and Germans as the most active European investors in L.A. real estate.

One Korean company - K. Young Inc., a subsidiary of Korean real estate/construction giant Kunyoung Group - has been particularly active in the L.A. real estate market over the past year.

Last September, it became a financial and development partner for the planned second phase of the Water Garden, a Class-A office development in Santa Monica.

More recently, K. Young surprised L.A.'s real estate community in May, when a company affiliate plunked down $6 million for a development site at 655 N. Central Ave. in downtown Glendale. The K. Young affiliate is planning to break ground on a 400,000-square-foot office tower at the site by year-end. That would be the first major new "speculative" office development in L.A. County in five years.

"The Korean companies are looking for large office high-rise buildings in Los Angeles. The companies that invest are usually big corporations, so they're not interested in smaller things," said Kenneth Park, president of Busi-Com International, a real estate consulting and brokerage firm based in the Koreatown district of Los Angeles.

Taiwanese takers

Rivaling the Koreans, the Taiwanese have made some high-profile L.A. real estate acquisitions of their own in recent months, and sources said the trend will likely continue well into the second half of 1995.

The buyers in the two biggest Taiwanese-backed acquisitions of the second quarter were both advised by the team of Eddy Chao of Candet Properties in Alhambra and Richard Alter of Financial Capital Investment Co. of West Los Angeles.

Chao and Alter advised Taiwanese investors in the purchase of the 202-room Whittier Hilton Hotel in downtown Whittier in May, and the pair also helped Taiwanese clients acquire the 430,000-square-foot Pacific Center office building at 523 W. Sixth St. in downtown L.A. in early April.

Chao said he and Alter are currently working on additional deals for two Taiwanese investors, each of which is valued in "the tens of millions of dollars." He said he and Alter are also working with a group from Hong Kong with "good-sized capital in the U.S."

Randy Li, president of real estate adviser Lilly Enterprises Inc. in Hancock Park, explained that Taiwanese and Hong Kong companies are investing in U.S. real estate to diversify their holdings away from their homelands. Li said he is currently working with several small Hong Kong investors interested in buying L.A. real estate.

Dutch buy

His largest client, Polylinks International Ltd., a Hong Kong-based real estate investment firm, would like to take a $30 million to $40 million position in a Southland office building in the near future, Li said.

Among the Europeans, the Dutch firm Internationale Nederlanden Groep NV, whose U.S. subsidiary ING Capital Corp. is based in New York City, has been an active buyer of L.A. real estate over the past year.

ING, which offers financial products and services worldwide, most recently purchased the 130,000-square-foot Westwood Medical Center in Westwood in June.

Over the past 12 months, the Dutch firm has also conducted several acquisitions with Highridge Partners, a real estate investment partnership based in El Segundo. Back in January, Highridge and ING were part of a consortium that jointly acquired the entire real estate portfolio of San Francisco-based Pacific Telesis Group for more than $160 million.

Other major acquisitions by ING over the past year include the 122,000-square-foot GTE Building at 12501 E. Imperial Highway in Norwalk and the real estate portfolio of Glendale-based Fidelity Federal Bank, which contained 91 multi-family dwelling units in L.A. County.

"We are the only Dutch company that does principal investment directly in real estate with a trading focus," said John Wickser, managing director of ING's L.A. office. He explained that ING's real estate acquisitions in L.A. and throughout the United States are primarily short term. The company resells most of its U.S. properties within a few years of purchasing them.

Aside from ING, several sources said, German companies are also seriously interested in L.A. real estate.

"German funds are aggressively looking at American real estate, particularly office products," said Wickser. He pointed out that there are a number of low-visibility ways in which European investors may be buying U.S. real estate, including via pension funds and other investment funds.