Friday, April 14, 2006
The play for Mid-Wilshire: Dr. David Lee used a simple strategy to amass $1 billion in real estate
Los Angeles Business Journal, July 26, 2004 by Andy Fixmer
DR. David Lee is not your typical internist.
A native of South Korea, Lee carne to the United States more than three decades ago, but instead of focusing strictly on medicine, he and several other Korean-American investors have assembled one of the single-largest portfolios of real estate in Los Angeles County.
Starting in the Mid-Wilshire area in the wake of L.A.'s 1992 civil unrest, Lee has acquired six million of that submarket's seven million square feet of office space--and he has used that base to stretch his holdings to the Westside, the San Fernando Valley, the San Gabriel Valley, Long Beach and Orange County.
He now owns more than 70 buildings--nearly half with Wilshire Boulevard addresses--that amount to more than 13 million square feet, making him among the county's largest landlords.
"I've never heard of a private investor who has been able to amass such a large portfolio in such a short period of time," said Howard Stern, senior vice president and chief investment officer of Arden Realty Inc. "There isn't anybody else out there making purchases at this rate."
In the second quarter alone, Lee's Jamison Properties Inc. bought $120 million worth of office buildings--three on Wilshire Boulevard--totaling more than 400,000 square feet.
"I don't run management day to day anymore," Lee said in an extended interview with the Business Journal. "My day job the last two years has been acquisitions. We're buying about one building per month now."
In terms of square footage, Jamison Properties controls more L.A. County office buildings than regional real estate investment trusts including Arden Realty Group and high-profile local firms, such as Douglas Emmett & Co., that focus on buying trophy assets.
Gradually, Lee's own profile is rising, especially with several notable purchases off Wilshire Boulevard, including the downtown Los Angeles World Trade Center for $53 million, and the South Bay Herbalife building on Century Boulevard for $22.3 million.
Now, Jamison is on the verge of going national. Lee said the firm is scouring Northern California and out-of-state properties and is near closing several deals as far away as Texas.
He has to diversify the portfolio," said Manfred Schaub, an associate with Cushman & Wakefield Inc. who in the last four months represented two separate sellers on deals with Lee. "He doesn't want all the cash flow coming from one boulevard in Los Angeles."
Ripple effect
Still, it's L.A.'s Mid-Wilshire atea, once a high-end address for corporations and exclusive department stores, where Lee continues to make his mark--so much so that other developers now find it easier to move forward with projects and find financing.
At the area's epicenter is the intersection of Wilshire Boulevard and Western Avenue, where a Red Line subway station already has become an important transportation hub. Now, the corner will be transformed by three projects that, combined, will add 175,000 square feet of retail and 500 apartments. Specifically:
* Upside Investments Inc. has started construction on a $52 million conversion of the 22story former Union Bank building into 262 apartments and 25,000 square feet of retail on two floors.
* Archeon International Group has won approval to build a $55 million project atop the subway station consisting of 240 apartments. 50,000 square feet of retail and a Metro Rapid transfer center.
* Young Choi, owner of the Korean restaurant chain Woo Lae Oak Inc., will develop a four-story building containing 100,000 square feet of retail space, including room for a three-screen movie theater.
"As housing downtown takes off, people will be able to take the subway to our shops and restaurants," said Gary Russell, executive director of the Wilshire Center Business Improvement Corp., which runs the area's business improvement district.
Two blocks from Western, at the corner of Wilshire Boulevard and Hobart Street, Accord Interest LLC is proposing to tear down a five-story office building and in its place erect a 182,000-square-foot shopping center anchored by a big box store.
"It's a place where people are investing a lot of money," said Russell. "It's a big level of investment that wasn't even on the radar five years ago."
And though he studiously avoids coming across as a real estate mogul, the 50-year-old Lee can't help but receive attention--not with a porffolio worth more than $1 billion, according to Jamison Properties' Web site.It's getting to the point where it's going to be hard for him to remain anonymous," said Michael J. Dunn, executive vice president of Charles Dunn & Co. Inc. "In Southern California, where celebrity status is a burden for a lot of people, he doesn't avoid the press but he also doesn't actively seek it out."
Unlike larger-than-life figures such as Donald Trump or Sam Zell, Lee prefers to stay as far from the spotlight as possible. In response to interview requests for this profile, Lee was at first reluctant to have people reading about him. "I don't want that," he said. "When people think you're a celebrity, they expect you to pay more. I don't need that."
(Reporters al the Business Journal have been trying to speak with Lee at length about his business operations for more than two years. Shortly before deadline, Lee agreed to an interview for this article.)
Out of limelight
Those in the Korean business community say his shyness goes beyond avoiding the media. "He doesn't show his face a lot," said John Cho, assistant editor on the business desk of the Korea Times. "He's kind of a Howard Hughes of the Korean community."
Lee does donate handsomely to scholarship funds, Korean community causes and UCLA's school of dentistry, where his wife Miki Nam is an alumna. He also is on the board of the Korean American Museum and has spent time working with the Wilshire Center Business Improvement District. "I'm not as active as I would like to be," he said. "When I retire I hope to be involved much more."
He is, by many measures, fully acculturated into Southern California's world of successful businessmen. An Encino resident and father of four teen-agers, he has been a member of the Lakeside Country Club in Toluca Lake for 20 years.
"I play once or twice a month," said Lee, who sports a 24 handicap.
When it comes to politics, he tries to avoid getting involved. "We support anyone who has the job currently," he said. "I'm not trying to change the political system, I'm trying to get along with people."
To stay focused on life outside real estate, he works a 12-hour day at his Van Nuys medical practice every Wednesday. "It helps me to be grounded a little more," he said. "It's good to be grounded in life and not get too ambitious in that way."
Getting started
The play for Mid-Wilshire: Dr. David Lee used a simple strategy to amass $1 billion in real estate
Much of Lee's work ethic is derived from his parents, who immigrated to Los Angeles from South Korea in 1971 when they were in their 40s so their children could have access to better schools and universities.
Lee's father opened a small grocery store near the corner of Western Avenue and Eighth Street. Lee--the fifth of seven siblings--grew up in Pasadena and then Encino before heading to Northwestern University for a six-year medical program.
When he returned to Los Angeles, he enrolled in a UCLA program where he earned master's degrees in business administration and public health.
Shortly after starting his medical practice, Lee began to get involved in real estate by buying apartment buildings. "I initially got into it as a tax shelter game," he said.
But when prices for high-rises along Mid-Wilshire tanked after the civil unrest of 1992, Lee said he decided to take a more serious approach. "After the riots nobody wanted to go into Mid-Wilshire," he said. "I thought it was a good time to go into real estate. The buildings were very undervalued compared to their cash flow."
Institutional banks, on the other hand, were not as secure in their belief in the area, and it took Lee some time to make his first buy. By 1994, he had raised about $3 million from investors, including several siblings and relatives of his wife. Lee obtained a 50 percent loan from Chinatrust Bank (USA) to purchase the 400,000-squarefoot 3200 Wilshire building for $6.3 million.
Even with a vacancy of more than 40 percent, Lee said buying the building for $17 a foot was a steal. By forgoing credit checks and charging low deposits, he said he was able to fill the building and give his investors a quick return.
At the same time, the economy began to recover as interest rates began to fall. Lee refinanced the building and used the equity to buy Wilshire Park Place at 3700 Wilshire Blvd. in 1996 for $14.7 million. The buildings were again refinanced to raise $33.5 million to buy the 630,000-square-foot Equitable Plaza at 3435 Wilshire Blvd.
It's a system that Lee, who takes a 30 percent stake in every purchase, continues to use today. The only change is that he now borrows from Wall Street banks and has an investor pool of more than 100. "We are a very simple operation to some degree," Lee said. "I would say there's not a whole lot of risk-taking here. Real estate is pretty simple."
Keeping it simpleThose involved in deals with Lee, who personally negotiates most of the transactions, describe him as the antithesis of a hot-headed buyer. If a deal goes south, or the numbers aren't to his liking, he's known to simply walk away.
I've never heard him scream or yell or bark," said Dunn, who figures his firm has sold Lee 10 buildings. "It happens many times with people handling a lot of transactions and things don't go their way. But that's not his style. He's always very civil."
As Jamison cornered the Mid-Wilshire market, Lee said he purposely kept rents low to drive occupancy, a position that has left the submarket with one of the county's lowest vacancy rates--and rents $1 a square foot lower than the county average, according to Grubb & Ellis Co.
"I don't think Jamison has had a negative impact on the market," Dunn said. "Vacancy rates have dropped, rental rates have firmed up somewhat and I think that's helped the overall market and benefited other owners."
At first, tenants in some of Lee's buildings complained that their new landlord didn't spend enough on upkeep and services, according to Chris Runyen, a Grubb & Ellis vice president. But Runyen said many of Jamison's critics have been silenced as the company began renovating common areas of its buildings and paying for better landscaping.
One telling indicator: Jamison and Lee have so far avoided getting entangled in lawsuits with disgruntled tenants and investors. A check of the Los Angeles County Superior Court system carne up with no lawsuits naming Jamison Properties of Lee as lead defendant--a rarity in the real estate industry, where tenants and investors commonly settle disagreements in court.
"Lawsuits are filed all the time in this business," said Runyen. "It's something you almost can't avoid, but he has managed to go this long without any legal disputes. That's pretty amazing."
Lee said that's because he likes to keep things simple. "In real estate you're better off if yon just use common sense," he said. "People get too creative when they buy real estate, making all these fancy projections. They make things too complex."That simplicity in buying real estate has been a theme through Lee's transactions, according to Marc Renard, a Cushman & Wakefield broker who sold Lee his first property. Renard said Lee has always looked at the basic operations of a building and taken a long-range view when buying real estate.
"When I sold him that first building, I don't think he said, 'Someday I'm going to dominate the market,' but I definitely saw a vision in his strategy," Renard said. "He has a big picture approach to doing deals."
Los Angeles Business Journal, July 26, 2004 by Andy Fixmer
DR. David Lee is not your typical internist.
A native of South Korea, Lee carne to the United States more than three decades ago, but instead of focusing strictly on medicine, he and several other Korean-American investors have assembled one of the single-largest portfolios of real estate in Los Angeles County.
Starting in the Mid-Wilshire area in the wake of L.A.'s 1992 civil unrest, Lee has acquired six million of that submarket's seven million square feet of office space--and he has used that base to stretch his holdings to the Westside, the San Fernando Valley, the San Gabriel Valley, Long Beach and Orange County.
He now owns more than 70 buildings--nearly half with Wilshire Boulevard addresses--that amount to more than 13 million square feet, making him among the county's largest landlords.
"I've never heard of a private investor who has been able to amass such a large portfolio in such a short period of time," said Howard Stern, senior vice president and chief investment officer of Arden Realty Inc. "There isn't anybody else out there making purchases at this rate."
In the second quarter alone, Lee's Jamison Properties Inc. bought $120 million worth of office buildings--three on Wilshire Boulevard--totaling more than 400,000 square feet.
"I don't run management day to day anymore," Lee said in an extended interview with the Business Journal. "My day job the last two years has been acquisitions. We're buying about one building per month now."
In terms of square footage, Jamison Properties controls more L.A. County office buildings than regional real estate investment trusts including Arden Realty Group and high-profile local firms, such as Douglas Emmett & Co., that focus on buying trophy assets.
Gradually, Lee's own profile is rising, especially with several notable purchases off Wilshire Boulevard, including the downtown Los Angeles World Trade Center for $53 million, and the South Bay Herbalife building on Century Boulevard for $22.3 million.
Now, Jamison is on the verge of going national. Lee said the firm is scouring Northern California and out-of-state properties and is near closing several deals as far away as Texas.
He has to diversify the portfolio," said Manfred Schaub, an associate with Cushman & Wakefield Inc. who in the last four months represented two separate sellers on deals with Lee. "He doesn't want all the cash flow coming from one boulevard in Los Angeles."
Ripple effect
Still, it's L.A.'s Mid-Wilshire atea, once a high-end address for corporations and exclusive department stores, where Lee continues to make his mark--so much so that other developers now find it easier to move forward with projects and find financing.
At the area's epicenter is the intersection of Wilshire Boulevard and Western Avenue, where a Red Line subway station already has become an important transportation hub. Now, the corner will be transformed by three projects that, combined, will add 175,000 square feet of retail and 500 apartments. Specifically:
* Upside Investments Inc. has started construction on a $52 million conversion of the 22story former Union Bank building into 262 apartments and 25,000 square feet of retail on two floors.
* Archeon International Group has won approval to build a $55 million project atop the subway station consisting of 240 apartments. 50,000 square feet of retail and a Metro Rapid transfer center.
* Young Choi, owner of the Korean restaurant chain Woo Lae Oak Inc., will develop a four-story building containing 100,000 square feet of retail space, including room for a three-screen movie theater.
"As housing downtown takes off, people will be able to take the subway to our shops and restaurants," said Gary Russell, executive director of the Wilshire Center Business Improvement Corp., which runs the area's business improvement district.
Two blocks from Western, at the corner of Wilshire Boulevard and Hobart Street, Accord Interest LLC is proposing to tear down a five-story office building and in its place erect a 182,000-square-foot shopping center anchored by a big box store.
"It's a place where people are investing a lot of money," said Russell. "It's a big level of investment that wasn't even on the radar five years ago."
And though he studiously avoids coming across as a real estate mogul, the 50-year-old Lee can't help but receive attention--not with a porffolio worth more than $1 billion, according to Jamison Properties' Web site.It's getting to the point where it's going to be hard for him to remain anonymous," said Michael J. Dunn, executive vice president of Charles Dunn & Co. Inc. "In Southern California, where celebrity status is a burden for a lot of people, he doesn't avoid the press but he also doesn't actively seek it out."
Unlike larger-than-life figures such as Donald Trump or Sam Zell, Lee prefers to stay as far from the spotlight as possible. In response to interview requests for this profile, Lee was at first reluctant to have people reading about him. "I don't want that," he said. "When people think you're a celebrity, they expect you to pay more. I don't need that."
(Reporters al the Business Journal have been trying to speak with Lee at length about his business operations for more than two years. Shortly before deadline, Lee agreed to an interview for this article.)
Out of limelight
Those in the Korean business community say his shyness goes beyond avoiding the media. "He doesn't show his face a lot," said John Cho, assistant editor on the business desk of the Korea Times. "He's kind of a Howard Hughes of the Korean community."
Lee does donate handsomely to scholarship funds, Korean community causes and UCLA's school of dentistry, where his wife Miki Nam is an alumna. He also is on the board of the Korean American Museum and has spent time working with the Wilshire Center Business Improvement District. "I'm not as active as I would like to be," he said. "When I retire I hope to be involved much more."
He is, by many measures, fully acculturated into Southern California's world of successful businessmen. An Encino resident and father of four teen-agers, he has been a member of the Lakeside Country Club in Toluca Lake for 20 years.
"I play once or twice a month," said Lee, who sports a 24 handicap.
When it comes to politics, he tries to avoid getting involved. "We support anyone who has the job currently," he said. "I'm not trying to change the political system, I'm trying to get along with people."
To stay focused on life outside real estate, he works a 12-hour day at his Van Nuys medical practice every Wednesday. "It helps me to be grounded a little more," he said. "It's good to be grounded in life and not get too ambitious in that way."
Getting started
The play for Mid-Wilshire: Dr. David Lee used a simple strategy to amass $1 billion in real estate
Much of Lee's work ethic is derived from his parents, who immigrated to Los Angeles from South Korea in 1971 when they were in their 40s so their children could have access to better schools and universities.
Lee's father opened a small grocery store near the corner of Western Avenue and Eighth Street. Lee--the fifth of seven siblings--grew up in Pasadena and then Encino before heading to Northwestern University for a six-year medical program.
When he returned to Los Angeles, he enrolled in a UCLA program where he earned master's degrees in business administration and public health.
Shortly after starting his medical practice, Lee began to get involved in real estate by buying apartment buildings. "I initially got into it as a tax shelter game," he said.
But when prices for high-rises along Mid-Wilshire tanked after the civil unrest of 1992, Lee said he decided to take a more serious approach. "After the riots nobody wanted to go into Mid-Wilshire," he said. "I thought it was a good time to go into real estate. The buildings were very undervalued compared to their cash flow."
Institutional banks, on the other hand, were not as secure in their belief in the area, and it took Lee some time to make his first buy. By 1994, he had raised about $3 million from investors, including several siblings and relatives of his wife. Lee obtained a 50 percent loan from Chinatrust Bank (USA) to purchase the 400,000-squarefoot 3200 Wilshire building for $6.3 million.
Even with a vacancy of more than 40 percent, Lee said buying the building for $17 a foot was a steal. By forgoing credit checks and charging low deposits, he said he was able to fill the building and give his investors a quick return.
At the same time, the economy began to recover as interest rates began to fall. Lee refinanced the building and used the equity to buy Wilshire Park Place at 3700 Wilshire Blvd. in 1996 for $14.7 million. The buildings were again refinanced to raise $33.5 million to buy the 630,000-square-foot Equitable Plaza at 3435 Wilshire Blvd.
It's a system that Lee, who takes a 30 percent stake in every purchase, continues to use today. The only change is that he now borrows from Wall Street banks and has an investor pool of more than 100. "We are a very simple operation to some degree," Lee said. "I would say there's not a whole lot of risk-taking here. Real estate is pretty simple."
Keeping it simpleThose involved in deals with Lee, who personally negotiates most of the transactions, describe him as the antithesis of a hot-headed buyer. If a deal goes south, or the numbers aren't to his liking, he's known to simply walk away.
I've never heard him scream or yell or bark," said Dunn, who figures his firm has sold Lee 10 buildings. "It happens many times with people handling a lot of transactions and things don't go their way. But that's not his style. He's always very civil."
As Jamison cornered the Mid-Wilshire market, Lee said he purposely kept rents low to drive occupancy, a position that has left the submarket with one of the county's lowest vacancy rates--and rents $1 a square foot lower than the county average, according to Grubb & Ellis Co.
"I don't think Jamison has had a negative impact on the market," Dunn said. "Vacancy rates have dropped, rental rates have firmed up somewhat and I think that's helped the overall market and benefited other owners."
At first, tenants in some of Lee's buildings complained that their new landlord didn't spend enough on upkeep and services, according to Chris Runyen, a Grubb & Ellis vice president. But Runyen said many of Jamison's critics have been silenced as the company began renovating common areas of its buildings and paying for better landscaping.
One telling indicator: Jamison and Lee have so far avoided getting entangled in lawsuits with disgruntled tenants and investors. A check of the Los Angeles County Superior Court system carne up with no lawsuits naming Jamison Properties of Lee as lead defendant--a rarity in the real estate industry, where tenants and investors commonly settle disagreements in court.
"Lawsuits are filed all the time in this business," said Runyen. "It's something you almost can't avoid, but he has managed to go this long without any legal disputes. That's pretty amazing."
Lee said that's because he likes to keep things simple. "In real estate you're better off if yon just use common sense," he said. "People get too creative when they buy real estate, making all these fancy projections. They make things too complex."That simplicity in buying real estate has been a theme through Lee's transactions, according to Marc Renard, a Cushman & Wakefield broker who sold Lee his first property. Renard said Lee has always looked at the basic operations of a building and taken a long-range view when buying real estate.
"When I sold him that first building, I don't think he said, 'Someday I'm going to dominate the market,' but I definitely saw a vision in his strategy," Renard said. "He has a big picture approach to doing deals."
