Money managers run from Katrina

Hurricane Katrina, the worst in U.S. history, forced investment management and pension fund staffs in Louisiana, Mississippi and Alabama to flee their offices and homes.

Orleans Capital Management LLC, an equity and debt manager with about $2 billion in assets, relocated temporarily to Houston from New Orleans. Farrell Crane, vice president and general counsel, said all 32 of the firm's employees and their families were able to leave New Orleans before Katrina hit shore. The firm's office is a few blocks from the city's French Quarter, which was heavily damaged by the storm.

"The big issue is when can we go back to see how much damage has been done to our homes. We left most of our belongings behind and the phone lines are down, so it's impossible right now to know that," Mr. Crane said.

"We had a family member drive around the area near New Orleans where our houses are, and she reported that the damage wasn't that bad. There are a lot of trees and power lines down, but our houses are not that damaged," he added.

Mr. Crane said that one biggest challenges is to find housing in Houston for all of the firm's employees. "When we got here, there were 37 corporate housing units available; I waited for a day and they were all gone."

The four partners at St. Denis J. Villere & Co. LLC, which manages about $1.5 billion, also decided to temporarily relocate to Houston from their New Orleans headquarters, said George Young, partner. The firm is using office space from The Charles Schwab Corp., custodian for roughly two-thirds of Villere's assets.

The partners will move into corporate housing with their families shortly. Mr. Young said they expect to be in Houston between two to six months.

Other Villere employees, who evacuated to areas such as Panama City, Fla., and Lafayette, La., will perform their sales and back-office support jobs remotely, he said. Mr. Young believes the office in New Orleans is intact.

"We're up and running for all practical purposes," said Mr. Young, who arrived in Houston Saturday and was at Best Buy soon after, purchasing computers and cell phones to resume business operations.

His two high-school-age daughters will start school in the Houston area. To his knowledge, his home, located in the "uptown area near Tulane University," is OK, although "the looters and levee break is another story. I don't know how that will play out," he said.

Schwab, San Francisco, has four offices closed in the gulf region: New Orleans; Jackson, Miss.; and Baton Rouge and Mandeville, La., said Glen Mathison, spokesman. Offices in Mobile and Birmingham, Ala., were shut down earlier in the week but reopened Sept. 2, he said. All 20 employees in those six locations are accounted for.

"Even if (the four shuttered branches) would physically be able to reopen, we want to be sensitive to other demands on the staff in the area, who are dealing with storm damage in their personal lives."

Schwab "is working to secure temporary housing and assistance funds for all employees impacted," Mr. Mathison said.

Morgan Stanley Inc., New York, has 50 employees in eight retail brokerage offices scattered throughout New Orleans; Biloxi, Miss.; and Mobile, Ala., said James O'Brien, spokesman. "I'm pretty sure there is nobody missing, but right now communication is spotty. And what I mean by communication is that we've heard from one or two people saying that they saw someone else and that they are alright," he said. The firm had closed all of the offices the week before the storm hit, he added. "Right now our main concern is their safety, and eventually finding them a place to live and work."

One money management executive, who did not wish to be identified, said the Ocean Springs, Miss., home of Harby Kreeger, a consultant at Morgan Stanley Investment Consulting and consultant to the City of New Orleans Employees Retirement System, had been destroyed by the storm. "Harby is in Baton Rouge, the last time I heard, but he had recently relocated to Ocean Springs … which is pretty much ground zero," said the money manager. An e-mail to Mr. Kreeger went unanswered.

Seth Martin, another spokesman for Morgan Stanley, said all of the firm's employees have been accounted for.

Merrill Lynch & Co. Inc., New York, closed 14 of its private-client offices before the hurricane hit. Four — Biloxi, New Orleans, and Metairie and Slidell offices in Louisiana — are closed until further notice.

"We have made contact with many (employees), but not all, and hear from more each hour," said Robert McCann, president, global private client group, said in an internal memo.

UBS AG, which has 71 employees in New Orleans and Gulfport, Miss., has set up an internal task force to deal with hurricane-related issues, said firm spokeswoman Christine Anderson. The firm is "still in the process of gathering information and accounting for all staff possibly affected," she said. Phone lines to the affected UBS branches are being redirected to other offices, Ms. Anderson said.

Hibernia Asset Management LLC, Baton Rouge, has moved "critical operations" to Shreveport, La., Richard Chauvin, president and chief investment officer, said in an e-mail. "Our staff is fully accounted for."

For some firms, the biggest challenge is helping employees adjust to temporary surroundings in the aftermath of a horrible experience.

"We have talked to nearly all (employees) and believe they are all in safe areas," said Carter Dunkin, senior vice president at Advantage Capital Partners. Advantage, a private equity firm that manages $650 million and has 18 employees in New Orleans and Metairie. Many will relocate temporarily to the firm's St. Louis office, although none has arrived yet, he said.

"We are looking into housing and schools," Mr. Dunkin said. "The simple part is finding places to put computers and laptops."

Officials at the $380 million City of New Orleans Employees Retirement System; the $170 million New Orleans Firefighters Pension & Relief Fund; and the $165 million New Orleans Sewerage and Water Board Employees' Pension fund could not be reached because phone lines in the city were still down late last week.

Joseph Meals, executive vice president at Consulting Services Group LLC, Memphis, consultant to the New Orleans Firefighters, said people at the fund are safe. "We heard from two of the trustees to tell us that everyone is OK," he said. "As far as what the condition of their homes is and what damage was done, I couldn't tell you at this point."

Meanwhile, institutional investors in real estate also took a hit from Katrina.

The Alabama Retirement Systems, Montgomery, for example, owns 10% of The Grand Hotel Marriott Resort Golf Club and Spa, Gulf Point, Ala. That hotel is closed indefinitely because of flooding, said David Bronner, chief executive officer of the $29 billion pension fund, which had invested about $60 million in the resort.

"We just did an on-site visit yesterday," Mr. Bronner said in an Aug. 31 interview. "The hotel is totally out of commission. Everything ground level is underwater, so we don't know when it will be operational. It could be two weeks or six months, we don't know."

Pyramid Advisors LLC, Boston, an institutional real estate manager, owns the New Orleans Lakeside Hotel and the Maison Deputy Hotel, both in New Orleans. In July, the firm also acquired the DoubleTree New Orleans Lakeside hotel in Metairie, along with seven other DoubleTree hotels around the country, for $280 million. John Hamilton, a principal at Pyramid, said executives there do not yet know the extent of the damage to the hotels. He declined to say how much the properties are worth. Pyramid has about $750 million under management.

And as the extent of the damage became known, financial services companies started assistance programs.

AMVESCAP, Atlanta, announced in an internal memo dated Sept. 1 that it will donate $50,000 to the American Red Cross and Salvation Army for relief efforts for the victims of Katrina. The firm is also granting one additional personal day for any employee who wants to volunteer time to help in relief efforts. Several dozen employees at the firm's Houston subsidiary, AIM Investments, are volunteering their time to help disburse food and medical supplies to displaced Katrina victims staying in the Houston Astrodome, said Ivy McLemore, an AIM spokesman.

ING Group, Citigroup Inc., Merrill Lynch & Co. and J.P. Morgan Chase & Co., all in New York, said they will contribute $1 million each to the American Red Cross to assist with Hurricane Katrina relief. Each firm is also matching employee donations to other relief organizations.