Unions playing key role in development

We see the work of the region's labor unions everyday, but behind the scenes, their clout as investors in a slew of major development projects continues to grow.

While the Employee Real Estate Construct Trust Funds have been in business since 1987 to invest local trade union pensions money in real estate projects, they stand out for their level of involvement throughout the region.

PenTrust Real Estate Advisory Services Inc., which serves as the investment manager fro the ERECT Funds, has a stake in nine major developments in the region that are either under construction or soon to be.

Including a major project in Cleveland, PenTrust puts the ERECT Funds total current investment at $65.5 million, helping leverage $462.8 million in development.

Targeting often much needed bridge funding to projects that promise to use local union labor, the ERECT Funds have been able to generate $169.3 million in trade union wages and benefits.

"Last year, I think, was pretty much our busiest year in terms of investment volume," said Tad Imbrie, director of investments for PenTrust, which partners with Johnstown-based Ameriserv Trust and Financial Services Co., the ERECT Funds' trustee in managing the investments.

Besides the labor unions, other investors in the funds include the commonwealth of Pennsylvania and Highmark Inc.

The ERECT Funds were instrumental in seeding some of the early projects that have helped to spur other major developments throughout the city.

In the Strip District, they provided key early funding for what is nowt he Cork Factory Lofts, the first major apartment development in the neighborhood not far from where Oxford Development Co. is developing the $130 million 3 Crossings, a mix of office buildings and an apartment complex in which the funds have made three investments totaling more than $11 million.

A similar pattern can be found at Bakery Square in the East End, where ERECT Funds investment at around the time of the recession helped the project go forward at a difficult time. Today, the funds also have investments in Bakery Square 2.0 across Penn Avenue.

Bakery Square, Pittsburgh

With Tower Two-Sixty set to open downtown and Schenley Place in Oakland leasing up tenants such as Facebook Occulus, Imbrie estimated that roughly half the projects the funds are invested in wouldn't have happened without the kind of gap funding they provide.

In the process, the funds generate healthy returns for the pension funds, create jobs for union construction workers and aid in efforts to revitalize the region.

It's a strategy Imbrie expects is unique from the rest of the country, where major national unions primarily invest in the biggest metros.

With the funds almost fully invested at the moment, Imbrie sees the investment savvy demonstrated by the ERECT Funds as contrary to the often negative perception unions have.

"All the unions should be emulating what the ERECT Funds' investors are doing," he said.

Original article published at: http://www.bizjournals.com/pittsburgh/print-edition/2016/05/13/unions-playing-key-role-in-real-estatedevelopment.html

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