Real Estate Investors Evaluate Portfolios by Lesley Hensell
With rising interest rates and signs of a potential economic slowdown, it's time for every investor to review the old portfolio. That's what The Bernstein Companies are counting on. The firm is casting out nets, hoping to find a joint venture partner and acquisition opportunities for its $100 million Consortium Capital equity fund. The Washington, D.C., commercial real estate firm currently manages a portfolio of more than 40 properties. Bernstein launched its first Consortium Capital fund in late 1997, placing $30 million of equity in joint ventures and other real estate acquisitions. That fund, labeled Consortium One, is fully invested in eight projects in the Washington, D.C., metro area. The new venture, Consortium Two, already has invested in several projects. These include a 261,000 square-foot office building in Richmond's central business district, as well as The Manhattan, a planned loft-style condominium development on Rhode Island Avenue in D.C. With Consortium Two, Bernstein is casting a wider net. “We are expanding our reach from Philadelphia to Richmond, inclusive of those two metropolitan areas,” said Adam Bernstein, president of the firm. “We're very flexible and entrepreneurial, ready to consider joint ventures, equity investment in existing projects which are poised for renovation or repositioning, and other value-added projects.” On the other side of the coin, Municipal Mortgage & Equity, LLC (NYSE: MMA) proudly announced that institutional investors have sunk $131 million into the company in three separate transactions. Check out these chunks of change. MuniMae completed a $60 million tax-exempt preferred equity offering, whose proceeds will be used to fund tax-exempt bond investments and provide working capital. Separately, MinuMae subsidiary Midland Companies received commitments totaling $31 million for a corporate tax credit fund, the proceeds of which will be used to finance affordable multifamily housing properties across the country. The Midland Companies also received a commitment of $40 million from two public employee pension funds for a multifamily housing real estate investment trust that is in formation. This $40 million is the initial investment in the $75 million Midland Multifamily Equity Real Estate Investment Trust. The REIT will invest in multifamily housing developments nationwide, operating on a 10-year term with possible extensions. MuniMae Chairman and CEO, Mark K. Joseph, commented, "May was a good month for MuniMae on the capital front. These significant investments by institutions provide us with resources to strengthen and grow our major product lines. Adding this to our other resources will enable us to finance over $750 million in multifamily housing this year. “The REIT now gives Midland additional equity capabilities to compliment its present debt capabilities,” said Robert Banks, chairman and CEO for Midland Companies. “Midland has consistently been a leader in providing a 'one-stop shop' for both debt and equity financing for multifamily developers nationwide.” So why have these institutional investors, including investment banks and pension funds, suddenly sunk such large amounts of capital into traditional real estate investments and REITs? Are other real estate investments across the country experiencing the same influx of capital? Despite the negative impact of rising interest rates on most real estate issues, continued uncertainty and deflation among technology stocks may have stirred a mini-revolution in real estate's favor. Stay tuned. | 
