Miami Herald: State may invest in Florida real estate

Sep 2, 2009

This story was published in the Miami Herald on September 2, 2009

Stung by a $250 million Manhattan real estate investment that tanked, Gov. Charlie Crist and two other Cabinet-level elected officials want to see more of Florida’s retirement pension fund invested in Florida real estate. “What’s the saying, ‘Buy low and sell high?’ ” Crist on Tuesday told Ash Williams, head of the State Board of Administration, which oversees the pension fund.

Crist has never owned a home and has long rented a St. Petersburg condo, but he said “acquaintance after acquaintance” is buying residential real estate at rock-bottom prices across the Sunshine State. “I can’t remember a time in my life when Florida real estate has been such a deal, and it occurs to me that if you have cash, if you have equity, maybe a smart investment would be residential real estate in Florida right now,” Crist said.

Chief Financial Officer Alex Sink agreed, saying the state will need more affordable housing in the future — and now might be the time to acquire it.

Attorney General Bill McCollum, the Republican running for governor against Sink, a Democrat, chimed in to say he agrees it’s a strategy worth considering.

Williams agreed to return to the next quarterly SBA meeting with a deeper look at how such a strategy might work, but he cautioned that there has been a “mixed record” in other states.

Tuesday’s meeting was the first quarterly meeting between the three Cabinet members and the SBA, which they oversee. Sink requested quarterly meetings earlier this summer to ensure the state’s investments and finances are in order.

The meeting covered topics that include strategies for long-term investing and the improved risk level of the state’s Hurricane Catastrophe Fund. The fund is now about $7 billion short of what’s needed to cover a major storm, compared with the $18 billion shortfall estimated in January.

Williams also said the value of the state’s pension fund stands at $99.6 billion, nearly $10 billion more than it was the previous quarter. That puts the pension fund up 12.5 percent to date over last year.

The pension fund’s uptick comes in spite of the recession and a major real estate investment that went sour. In 2007, the SBA invested $250 million in Peter Cooper Village, a residential real estate project built for World War II veterans. Williams, who was not leading the SBA when the state invested in Peter Cooper, told Cabinet members Tuesday that SBA officials thought the project was a potential moneymaker. But the project is in such trouble, the SBA is now valuing Peter Cooper “as a zero on our books,” Williams said.

Shannon Colavecchio can be reached at