It's been more than three years since the technology bubble burst on Wall Street. With tech stocks plummeting, investors were looking for secure places to put their money and real estate suddenly became a hot item.
SSR Realty Advisors Inc., a real estate investment company with headquarters on the East and West Coasts, is one firm benefiting from this trend. It invests money on behalf of institutional investors–currently, it has $5.4 billion of assets under management in multifamily, office, and retail space across the country.
To understand how the company, which is owned by MetLife, manages these funds, it may be best to think in threes. The company is broken into three business units–Core Separate Accounts, Tower Fund, and Multi-Housing–led by three managing directors. While the core Separate Accounts and Tower Fund units do possess some multifamily properties, they are primarily focused on commercial real estate. Jeffrey Allen, managing director, heads the San Francisco?based Multi-Housing unit, with $2.3 billion in assets, which also is broken into three divisions –portfolio management, development, and property management.
The portfolio management group works with investors and buys and sells SSR's various properties. Allen relies on three veteran managers–Lorenz Menrath, senior portfolio manager for California State Teachers' Retirement System (CalSTRS), Dale Gruen, senior portfolio manager for the California Public Employees' Retirement System (CalPERS), and Jeff Morris, senior portfolio manager for the unit's other funds. "The portfolio managers are, in essence, the COOs of their respective funds," Allen says. "They are responsible for the strategic and tactical execution of their investment plans."
The structure seems to work well for the Multi-Housing unit. For proof, just look at its performance against its benchmark, the apartment subindex of the National Council of Real Estate Investment Fiduciaries (NCREIF), which covers apartment properties owned by institutional investors. For the one-year period ending March 31, 2003, the unit's properties produced a 9.7 percent return without the effect of financing and debt, and its properties produced an 11.1 percent return with the effects of financing and debt versus a 9.0 percent return for the NCREIF apartment subindex. For the three-year period, the unit's apartments produced an 11.3 percent return without the effects of financing and debt, while its properties produced a 12.8 percent return with the effects of financing and debt. The subindex produced returns of 10.3 percent during this timeframe.
The company prides itself on its performance against this benchmark. "Our funds are driven by beating NCREIF," Allen says. "Our portfolio managers are making decisions that are in the best interest of their funds and help maximize their ability to beat the NCREIF index."