Talk about a cross-cultural connection.
3650 REIT, a national commercial real estate lender for large institutional investors, has secured a $100 million commitment from the South Korean Public Officials Benefit Association (POBA), a Seoul-based public pension fund, Commercial Observer has learned.
The commitment will help fund 3650 REIT’s “bridge- and event-driven strategy” lending platform, which specializes in extending short-term loans for acquisitions, recapitalizations, repositions and ground-up construction.
3650 REIT, which is headquartered in Miami and has offices in five other major U.S. cities, holds nearly $3 billion in assets under management and has a servicing platform of $13.5 billion dollars.
Jonathan Roth, 3650 REIT managing partner and co-founder, told CO that his firm’s prior partnerships with the California State Teachers Retirement System — known as CalSTRS — paved the way for a business relationship with POBA. CalSTRS and POBA established a joint venture partnership in February 2020 with a focus on investing in U.S. property.
Just as CalSTRS handles retirement funds for California teachers, POBA is the pension fund for South Korean public officials, where it manages $16 billion in assets.
“POBA enjoys a very good relationship with CalSTRsS, who, being a very large investor of 3650, naturally introduced us to their friends in Korea, and the conversations led to us creating the joint venture with POBA,” explained Roth.
Roth said that he hopes POBA’s $100 million investment into 3650 REIT’s bridge- and event-driven strategy will “evolve and morph” into a partnership in which the Korean pension fund invests in all of the firm’s various real estate strategies.
“We’ve always wanted to align ourselves with investors who are capable of growing with us in terms of an ability to invest large sums, and POBA certainly fits that description,” said Roth. “We enjoy having relationships with investors like POBA who understand what we do and appreciate our differentiated approach in how we do it.”
Harry Song, head of overseas real estate for POBA, described 3650 REIT as a perfect fit for his firm’s U.S. investment objectives.
“3650 is an ideal partner for POBA as we continue to seek international relationships with leading alternative assets firms in the U.S. and worldwide,” Song said in a statement. “The firm’s ability to utilize its lending experience and expertise through multiple real estate market cycles … makes it an attractive option to generate appealing, risk-adjusted returns for our fund members.”
Roth noted that private lenders like 3650 REIT are well positioned to capitalize on the liquidity pressures facing U.S. commercial banks, which represent nearly 50 percent of all commercial real estate debt capital, but have pulled back their lending outflows since the regional banking crisis this past spring. Persistently high interest rates set by the Federal Reserve have further constrained capital across the financial system over the past 18 months.
“If you think about the lending footprint of banks, that lending footprint has shrunk dramatically, so private lenders such as 3650 are busy filling the void,” explained Roth. “Those of us who enjoy having our own origination platform, with the ability to do our own due diligence and structure, close loans and hold them on our balance sheet and service them for life. We’re very attractive to borrowers right now.
“And POBA recognizes that,” he added.
Brian Pascus can be reached at email@example.com