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FAQ's
What year was the Fund founded? What is the structure of the Fund and Fund Management? What investments is the Fund permitted to make? What is the typical asset holding period? What is the Fund's on-going asset management role once properties are acquired? What are the benefits of investing in a real estate strategy involving development or property enhancement? How does the Fund utilize research? How is the Fund governed? What year was the Fund founded? Multi-Employer Property Trust commenced operations on April 1, 1982. What is the structure of the Fund and Fund Management? MEPT is an open-end commingled equity real estate fund. It is organized as a bank collective trust, which is maintained by NewTower Trust Company. MEPT is managed by three entities: Kennedy Associates Real Estate Counsel, LP (Kennedy), of Seattle, Washington, serves as the real estate investment advisor, Landon Butler & Company, LP™ (LBC) provides investor relations and marketing services to MEPT, and NewTower Trust Company (NewTower) of Bethesda, Maryland, serves as the trustee and fiduciary of the Fund. What investments is the Fund permitted to make? The Trustee of MEPT has the authority (under the MEPT Declaration of Trust and Participation Agreement) to invest in real estate investments as well as a variety of other investments (e.g. mortgages, stocks, bonds). However, except for its working capital balance which is invest in cash and money market funds, all MEPT investments are real estate-related. As stated in MEPT's Investor Participation Agreement, real estate investments means improved and unimproved real property, and intestests in real property, direct or indirect, and whether or not income producing; trust and participating certificates; bonds, debentures, mortgages, deeds of trust, securities, options, and notes secured by real property; leases and ground leases; condominiums; interests in corporations, joint ventures, limited liability companies, limited partnerships, or other business organizations to facilitate indirect investment in development of, or holding of title to interests in, or operation of, real or personal property by the Trust; and investments in joint ventures, partnerships, limited liability companies, limited partnerships, or corporations owning, developing, managing, or operating real property as their principal purpose and function. What is the typical asset holding period? MEPT typically owns an asset for seven to ten years, but will dispose of an asset if a favorable opportunity occurs. A formal hold/sell analysis is conducted each January after the annual budget has been formalized, but it may also be initiated because of an asset review for a quarterly report or a weekly portfolio meeting. The process of determining whether a property should be brought to market starts with assessing the risk profile of the asset and then estimating the achievable sales price. The disposition analysis is continuous and reported quarterly. Reasons for disposition may include a change in demographic and economic forecasts, real estate market conditions, new competitive product, property lease rollover projections and market conditions for the sale of property. What is the Fund's on-going asset management role once properties are acquired? Kennedy Associates Real Estate Counsel, LP is responsible for overseeing all asset management and stewarding properties throughout their lifecycle. Asset management entails ongoing management of commercial real estate properties: hiring and overseeing property managers, leasing agents, and all other service providers; initiating and guiding capital improvement projects; creating and assuring execution of annual business plans and budgets; orchestrating the appraisal and valuation processes; managing property accounting and reporting; and, establishing and maintaining procedures to assure tenant satisfaction. Asset managers at Kennedy are responsible for overseeing third-party property management firms and leasing agents and ensuring that the property is managed in line with MEPT objectives and policies. Kennedy's 18 asset management professionals are supported by a seasoned team of valuation experts, financial analysts, administrative assistants, report coordinators, and accounting and finance personnel. Since the Fund's inception, Kennedy has been involved with every MEPT project from the beginning: negotiating and structuring development agreements, monitoring projects through construction, and overseeing the leasing and property management of each project. Kennedy asset managers perform a variety of functions to ensure quality control at the property level. Senior asset managers, in the role of team leaders, coordinate the implementation and integration of asset management functions into the acquisition and portfolio management process. Kennedy uses non-affiliated property management and leasing companies since it gives Kennedy the greatest amount of flexibility to select, motivate, manage and replace (if necessary) underperforming property and leasing management firms. Moreover, the competition between local property management and leasing companies is very healthy for MEPT. This competitive environment helps establish a broad spectrum of information sources, which is the key to effective decision making. By not owning a property management company, Kennedy avoids the inevitable conflict of interest associated with such vertical integration and Kennedy remains sharply focused on client goals. What are the benefits of investing in a real estate strategy involving development or property enhancement? MEPT's primary investment strategy is to create top-quality, core, income-producing assets through development, rehabilitation, or acquisition and repositioning of undervalued assets. MEPT adds value through development and redevelopment, acquiring core properties by building them at or below replacement cost. The Fund invests in office buildings, warehouses, flex/research and development facilities, retail centers, apartment complexes and hotels in order to maintain a diversified, institutional-grade "core" portfolio. By capturing value relatively early in the life of the asset, MEPT's portfolio produces strong and stable current income. The Fund makes these investments through a combination of forward commitments and fee- and incentive-based Developer Service Agreements (DSAs) with developers. MEPT's risk management strategy for development projects mitigates the impact of construction risk, market risk, and environmental, legal and other property-related risks. Finally, as the owner, MEPT controls all major decisions in the development process. Incentives to stay on budget and on schedule are typically negotiated into the DSA, as is a lease-up bonus. MEPT has a state-of-the-art, institutional-quality real estate portfolio that has resulted from this strategy. The properties in MEPT's portfolio average approximately 10 years in age. Kennedy Associates Real Estate Counsel, LP, MEPT's real estate advisor, is highly skilled in the entire spectrum of development and construction management from land acquisition through lease-up. These skills are leveraged through well-conceived and time-tested structures with developers, to reward superior performance. Kennedy has invested more than $5 billion through presale and Development Service Agreement arrangements with developers in a variety of very successful new construction, expansion and/or workout projects. MEPT's management team has worked together since 1982 to consistently and successfully execute MEPT's investment strategy. Kennedy and LBC co-founded the Fund, and most of the founding principals are still active in the day-to-day operations of the fund. During the 26 years that MEPT has been in operation, Kennedy has built strong relationships with major real estate developers, leasing firms and property managers both nationally and in the markets where the Fund is active, which ensures that MEPT has access to first-rate investment opportunities through all phases of a real estate cycle. The importance of these relationships and experience is evident in the Fund's performance. With over $7.29 billion in net assets, MEPT is one of the one of the largest commingled real estate equity funds in the country and the largest fund with a commitment to union labor.
An extensive library of these and other resources is maintained, used frequently and available to all staff. A file for each market and sub-market by property type is kept up-to-date, in hardcopy and digital forms. Because of MEPT’s longstanding involvement in over 25 markets nationwide, the Fund has access to local and often proprietary sources of market and related information. While MEPT refers to national sources of real estate data, the Fund’s greatest and most reliable source of information stems from day-to-day involvement in each MEPT market. As a result, MEPT never relies solely on any single real estate source. Kennedy publishes periodic white papers for clients and audiences in the industry. Kennedy’s research and other personnel are also active members of numerous organizations including NCREIF, NAIOP, NAREIM, ULI, PREA, National Association of Business Economists, Regional Science Association, and other local and regional economic development and real estate organizations. In a number of markets that many institutional investors have avoided because a “top-down” analysis indicated a higher than average vacancy rate or seemingly unattractive market fundamentals, MEPT has created high-return core assets by serving an unfulfilled market need. MEPT’s ability to capitalize on these opportunities stemmed from Kennedy’s in-depth research of specific users in these markets and studies of construction methods and materials allowing MEPT to develop projects at a significantly lower cost. No amount of top-down analysis can replicate this type of research. From a portfolio perspective, Kennedy has conducted extensive
research supporting MEPT's focus in markets with the proven ability to generate
continued demand for all property types, withstand business cycle and market
volatility, and provide relative liquidity and economic diversification.
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