The Aug. 22 issue of Pensions & Investments contained an edited version of an article from the Aug. 22 issue of Crain's Chicago Business, P&I's sister publication, about money managers handling city, state and county public pension funds. The articles omitted certain facts about a mortgage portfolio handled by Chicago-based Capital Associates Realty Advisors.
The Crain's story did not mention that the basket of troubled mortgages was inherited by Capital Associates from a previous money manager. Capital Associates played no role in the actual selection of the mortgage investments made by the city of Chicago's Municipal Fund.
In addition, the 1991 performance of the mortgage portfolio was hampered by a $10 million writedown of two non-performing loans originated prior to Capital Associates' involvement with the $48.6 million portfolio.
As a result, the article made an unfair comparison between Capital Associates' performance and the performance of an industry benchmark for mortgage investments. Therefore, the comparison of Capital Associates' overall city pension fund performance to an industry benchmark was misleading.
Crain's should have reported that Capital Associates' inherited portfolio of troubled real estate and mortgages had limited upside potential. Accordingly, any reference to its performance costing taxpayers or pensioners money was misguided and should not have been made.
Capital Associates founder Thomas Rosenberg notes that his company's management of city real estate and mortgage investments resulted in a substantial savings for taxpayers and pensioners.
As noted in the Aug. 22 story, a real estate fund composed of properties selected by Capital Associates has posted a gain of 34% during the four quarters ended June 30.
P&I regrets the omission.