Taft-Hartley funds have long been interested in real estate investing. But except for a few large ones, not many union funds have used real estate consultants.
Bruce Korter, president of Columbia Consulting Group Inc., Portland, Ore., says Taft-Hartley funds have the same needs as other funds for realty consulting.
Mr. Korter and three other consultants started Columbia last year to focus on union pension funds and real estate. So far, the firm has one client, the $200 million pension fund of the Carpenters, District Council Oregon & Washington Locals in Tigard, Ore.
Although Taft-Hartley funds generally are small, they have a bigger appetite for real estate investing than do corporate and public funds of similar asset sizes, Mr. Korter noted. And many do development projects, the most risky way to invest in real estate.
"The one thing about Taft-Hartley funds, particularly the building trades, is they have always had a reason to be in real estate: job creation," said Mr. Korter.
This penchant for real estate investing, coupled with poor oversight of the pension fund's investment manager, could result in problems for trustees.
Mr. Korter noted the Department of Labor in late 1994 ruled that the trustees of the Arizona State Carpenters Pension Trust Fund were liable for real estate losses totaling $9 million.
"They (the trustees) had not monitored their investment advisers appropriately," said Mr. Korter. "They did not know what they had or what the adviser was doing. Part of what we are offering is an understanding of the implications of the investments being made."