PRIDE of St. Louis, Inc.

As seen in St. Louis Construction News and Review Nov./Dec. 2005

NEWS

Leveraging Labor’s Ownership Stake
By Peter Downs

In the first of several planned job site luncheons,
PRIDE Executive Director Jim LaMantia urged more than
300 construction workers to maintain the highest levels of
productivity and safety at a $100 million hospital project
for St. John’s Mercy Healthcare in Creve Coeur, Mo.

PRIDE of St. Louis Inc. announced recently that it is leading a concerted effort to leverage labor’s stake in metropolitan St. Louis region by encouraging greater union pension fund support of capital sources that invest in 100 percent union projects. Some of these funds have invested in St. Louis and others are looking for opportunities to do so.

PRIDE mobilized union pension trustees and labor leaders to meet with representatives of key national investment funds on Thursday, November 3rd at Carmines Restaurant in downtown St. Louis. There, they heard James LaMantia, the executive director of PRIDE, describe that investments that union funds already are making in St. Louis, investments in such projects as Maryland Walk in Clayton, the Gateway Commerce Center, the Shaw Park Plaza, the West 700 commerce Center, and Fountain Lakes Commerce Center.

"These investments are win-win for us,” LaMantia said. “A good investment is a good investment, and these investments are good for the whole region.”

Brian Goding, president of Fiduciary Consultants, Inc., made the first pitch. He said that union pension funds should invest in real estate in order to diversify their portfolios. “Only 4.3 percent of union pension monies are invested in real estate,” he said, and it makes sense to increase that percentage. “These funds are competitive with other investment choices that you as trustees have,” he said, so pension trustees can invest in them with a clear conscience that they are abiding by their fiduciary duties to protect and grow the assets of their funds.

Fund managers, who made presentations to pension trustees, included James Darcy from ASB Capital Management, Mark Preznick from Commonwealth Realty Advisors, Roger Feldman, vice president of the Multi-Employer Property Trust, and Don Courtwright representing Union LaborLife’s J for Jobs Group.

Darcy said that ASB Capital Management is ‘looking to invest $200-$300 million in real estate a year to “hold forever.’” ASB is focused on mixed retail/office/residential markets in central business districts, he said, and it is “cautiously optimistic” about St. Louis. “We believe the flight to the suburbs has let us down and people are moving back to CBDs,” he said.

Preznick said that Commonwealth Realty Advisors has invested in the Bankers Lofts, Maryland Walk, the Railway Lofts, Summit Lofts, and a Hampton Inn in St. Louis. “We’re looking at Washington Avenue residential and at retail in the Metro East,” he said. Expressing a view of the future direction of St. Louis development similar to Darcy’s, he said, “We think the far flung suburbs are too far away and people will be moving to the east side. There are a lot of plans being floated for downtown, a lot of developers we’re talking to. We’re pretty bullish on downtown.”

The Multi-Employer Property Trust, said Felman, is interested in distribution centers. “Distribution centers here are successful,” he said. “The transportation infrastructure here is phenomenal. We are looking for more distribution center opportunities.”

Courtwright said the J for Jobs Group is continually looking at St. Louis, but had turned down several projects because they did not meet J for Jobs conservative underwriting guidelines. While the other funds take an ownership stake, J for Jobs does not. It provides debt financing. “We passed on the Kiel and Marquette Building, because there was not enough developer’s equity in those projects,” Courtwright said. “We are looking at the Port St. Louis condo project, but it does not look like it has much traction.”

Some of the management trustees at the meeting questioned the rate of return they would get on such investments, and whether it would be enough to meet their duty as fiduciaries. Goding assured them that these funds are competitive with national funds that do not have a union focus. Some of the trustees, however, said they were starting to put money into foreign funds, because their rates of return were too high to ignore. Goding pointed out that nothing is a sure bet, and foreign funds that have produced high returns also have high risks.