News
SMALLER IS BETTER
April 9, 2010
| Being modestly endowed may be a good thing during a downturn, at least for institutions, healthcare providers, and non-profits with real estate projects, said panelists at Thursday?s RELA breakfast. | |
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| Public Financial Management's Peter Scoliard, a panelist whose firm manages $30B in healthcare portfolios and $20B in higher ed, said those hurt most are institutions that used large endowments to cover shortfalls in operating budgets. Schools with smaller endowments are faring better because ?they're budget driven; used to cutting fat.? As a portfolio manager, he says he's mostly restructuring, ?getting out of swaps? and into more traditional vehicles. | |
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| We snapped A.J. Martini?s Paul Martini with moderator Sovereign Bank?s Peter Olivier. In fall ?08, Paul thought his family?s 60-year-old construction company would be fine, but by January '09 ?$100M of [institutional, corporate and healthcare] work vaporized.? He shrank his staff by 60%. ?The most significant indicator of the mess was when Harvard stopped building,? said Paul who saw HU accelerate development in the early 90?s, spurred by lower construction costs. Sitting with a half empty office, Paul ?gave away? space to 20 laid-off architects. ?It was an amazing boost.? Office buzz returned and in five years, when these architects? projects are ready for construction, Paul says, ?it'll pay off for me.? | |
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| Boston University's Carol Lovell says ?the financial crisis worked to our benefit; we don't rely on an endowment on the operations side.? Luckily, BU had already completed extensive real estate development, transforming itself from a commuter school. Butthe economy does pose liquidity issues. Still, BU hasn?t been forced to cancel projects but it will ?go slow? on future growth. For projects it has, or may do, it tends to use tax exempt bonds for debt while equity is generated internally from its operating model. |
