Flush with $100M, D.C's Bernstein Ready To Shop Union Funds Seek Sites Philly to Richmond

Like the old television show, Georgetown - based Consortium Capital is playing a game called "Let's Make a Deal."

Armed with a new $100 million equity fund, Consortium Capital, a subsidiary of development and managing firm The Bernstein Cos., is seeking to plunk down it's money in investment opportunities in the greater Washington metropolitan area and throughout the Mid-Atlantic.

With money derived from at least six union pension funds including United Mine Workers and the National Plumber and Pipe Fitters Union, the company now is launching its second investment venture, Consortium Capital Two. Following the $30 million success, Consortium Capital One, the firm has its eyes fixed on providing 100 percent equity for office, hotel, retail, or industrial projects anywhere from Philadelphia to Richmond.

"Where our fund is unique is we have real estate expertise ourselves," said Adam K. Bernstein, the firm's president. "We own and operate hotels, apartments buildings, office buildings - everything we own, we self manage ourselves. So, the fund is basically taking that track record, teaming up with these pension funds and using our entrepreneurial abilities to go out and find deals to invest in and partner up with."

"We move fast; we understand it, and we are an active investing partner, which gives us an ability to get to more deals and to get involved in more deals."

Now, with over three times as much money as the first fund, Bernstein plans to chart a much bolder course with Consortium Two by expanding the investment from around $3 million to $12 million and by moving outside the region to neighboring Philadelphia and Richmond.

"Philadelphia is a market that not only have we targeted, but the fund would really like to be in there because there is a lot of union concentration," said Bernstein.

Also, because the fund is made up of union money, any future investments made all will have to be union jobs.

"The game plan is to take institutional locations and grade B properties, reposition them, add value and turn [them] into institutional quality product," said Bernstein. "And, we are going to target hotel properties in this next fund."

Bernstein would not reveal in which specific projects the second fund is likely to invest, but said that if probably will be 24 to 30 months to get all the dollars invested.

Last year, Consortium Capital One, with an initial $30 million fund, has invested 100 percent equity in numerous area projects. Among them: 145,000-square-foot Atlantic Building at 920-930 F St. NW, in the district; the 59,000-square-foot Admiral Building in Annapolis, the 168-unit Suburban Park Apartments in Gaithersburg the 320,000-square-foot Andrews Manor Shopping Center in Camp Springs; and the 53,300-square-foot Wheaton Park.

Back in December, Bernstein made its biggest splash on the commercial real estate market in the district. Along with partner Union Realty Partners, Bernstein was able to convince Qwest Communications International Inc. to agree to open a telecommunication center at 1500 Eckington Place, NE, instead flocking to technology corridor along the Dulles Toll Road in Northern Virginia. "The Bernstein Companies were my first choice in terms of equity partners," said Steve Muller, president of Union Realty Partners. "Unlike other institutional capital sources, they really understand the operating side of the business and consequently they can make many fast and informed decisions, which is the key to any successful real estate venture."

Denver-based Qwest, which has revenues of approximately $3 billion last year, leased 100,000 square feet of the old warehouse, with plans to operate a major Cyber Center for Internet data traffic as part of a nationwide network of 10 sites. The deal, which included a 20 year lease, was valued at approximately $40 million.

Source: The Corridor Real Estate Journal

Author: Doug Scott