GlobeSt.com: Which cities garner most of your attention?

Kanovsky: We tend to be more active in the Northeast, the Midwest and the West Coast, although we have invested in Atlanta and San Antonio and Florida. There are actually very few places we have not been.

GlobeSt.com: What draws you to those primary areas?

Kanovsky: In part because we do insist on 100% union labor, but also because there is a higher concentration of multifamily opportunities in first-tier cities. Our focus is mostly on affordable housing.

GlobeSt.com: Is there much opposition to a union presence in those markets where you are less visible?

Kanovsky: Absolutely. There are places that are much harder, and there are developers who would not use union labor, so we simply do not offer them financing. While it is harder to establish oneself in certain cities, we've always been able to help a developer who wants to work with us, and still meet our union labor requirements. I should note that while we are sponsored by the AFL-CIO, we are not technically the union's pension fund.

GlobeSt.com: Explain.

Kanovsky: We have some 409 investors, all Taft-Hartley or public funds. The AFL-CIO pension fund is relatively small. Our name comes from the fact that the union started the investment program.

GlobeSt.com: Your profile is surprisingly low, considering the size of your portfolio--especially compared to other pension-fund investors, such as CalPers.

Kanovsky: CalPers is actually a major investor in HIT. But we are very conservative in terms of the types of investment we are involved in. Some 98% of our investments are secured or guaranteed securities.

GlobeSt.com: To what extent will the three real estate strategies under the investment program form a cohesive play?

Kanovsky: It has happened, since they are all part of the same umbrella and we share a common philosophy in terms of union labor and the benefits of contributing to a locale. But they also have three different sets of decision-makers and each fund brings a different set of benefits to perspective investors. Plus, the structure of each is different. HIT is run internally, but the Building Investment Trust has an outside fiduciary, the Mercantile Safe Deposit Bank & Trust. The fiduciary for the Urban Development Fund is Mass Mutual and Cornerstone Real Estate Advisors.

GlobeSt.com: How has the investment market in housing changed in your tenure?

Kanovsky: We saw a particular decline in HUD's federal housing programs as long as 20 years ago, but it became evident within the past six years. As a result, an ever-increasing percentage of our portfolio is in Fannie Mae and state agency securities. Ten years ago, we had 1.7% of our multifamily portfolio in Fannie Mae securities; now, it's 15%, and our Fannie Mae portfolio exceeds our entire multifamily portfolio of 10 years ago.

GlobeSt.com: How so?

Kanovsky: In '91 our total multifamily portfolio was $364 million. At the end of '01, our Fannie Mae portfolio was $409 million. The growth in multifamily investment is clearly in Fannie Mae/Freddie Mae securities.

GlobeSt.com: What is the outlook for your investment activity through the end of the year?

Kanovsky: We committed on the order of $100 million in the first quarter, so I'd say we're on track for investments between $300 million and $400 million by year end.

Email Helen Kanovsky