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Giuliani Firm Plans Real Estate Investment Fund

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Giuliani Firm Plans Real Estate Investment Fund

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Published: July 20, 2008

Entering the real estate market at a time of profound turmoil, Rudolph W. Giuliani’s company is planning an investment fund based on commercial and residential properties in New York and Washington, members of the venture said last week.

Seth Wenig/Associated Press

Rudolph W. Giuliani has returned full time to his firm.

The fund is Mr. Giuliani’s first formal foray into the real estate world and represents the continuing diversification of his business, Giuliani Partners, a management and consulting company he founded shortly after leaving City Hall in 2002.

In addition to his business efforts, Mr. Giuliani, the former mayor of New York City, continues to be active on the political front. This week he will be raising money for his federal political action committee, Solutions America, a senior aide said. He will also announce the creation of a state committee geared at helping Republicans retain their tenuous control of the State Senate. The creation of the state committee was reported on Saturday by The New York Post.

Despite rumors that Mr. Giuliani is considering a run for governor, the aide said, he has made no decisions about re-entering politics.

The people involved in the real estate venture said the fund would focus much of its energy luring foreign investors who see an opportunity in the continuing weakness of the dollar. Giuliani Partners has previously advised several investors in real estate matters.

Over the last year, as Mr. Giuliani competed in the Republican primary for president, he was largely absent from his company, and it shrank both in staff and in client base.

“It is fair to say that his running did have an impact on the business at the time,” said Anthony V. Carbonetti, a managing director at Giuliani Partners. “Now that Rudy is back full time, we see a great resurgence and feel very confident that we are getting back to where we were before the run.”

A division of Giuliani Partners, Giuliani Security and Safety, also does consulting work but concentrates on advising clients how to protect themselves from terrorism and fraud.

During the political campaign, the company sold off Giuliani Capital Advisers, a banking outfit that helped companies as they went through restructuring.

The real estate investment fund, like the other operations, will be something of a boutique shop. Mr. Giuliani’s company is going to form a partnership with Berman Enterprises, a family-owned company based in Rockville, Md., said Jeffrey E. Berman, one of the company’s partners.

They hope to raise $500 million to $750 million from investors to buy real estate, mainly in New York and Washington, with Berman Enterprises responsible for raising at least 10 percent of the capital.

The minimum threshold for an investor to take part in the fund, which will formally be called the Berman Enterprises Opportunity Fund, will be $25 million, Mr. Berman said.

Mr. Berman said that his family’s company had a 60-year history of investing in real estate and that it hoped to combine its expertise with the Giuliani’s firm’s connections and ability to broker deals.

“They are bringing something to the table that we don’t have and we are bringing something they don’t have,” he said.

“When we decided to put the fund together in my family, the money we wanted to go for was overseas money, and Rudy has a lot of traction overseas,” he said.

Mr. Giuliani’s firm has done significant amounts of business overseas, advising clients in countries from the Middle East to East Asia. In addition, Mr. Giuliani’s law firm, Bracewell & Giuliani, has an office in Kazakhstan.

Mr. Berman first met Mr. Giuliani four years ago when he accompanied the former mayor on a fact-finding trip to Russia.

Mr. Berman’s uncle, Michael David Epstein, later served as co-chairman on the Maryland finance committee of Mr. Giuliani’s presidential campaign.

At Giuliani Partners, the real estate investment fund will be overseen by Mr. Carbonetti and Geoffrey N. Hess, another managing partner with experience in real estate.

Mr. Carbonetti said the firm had helped broker occasional real estate deals in the past. For example, when Stuyvesant Town and Peter Cooper Village were put up for sale in 2006, the government of Qatar submitted a bid through Mr. Giuliani’s firm. But the country was ultimately unsuccessful in acquiring the property, which sold for $5.4 billion.

“Being in business, New York real estate is something that always comes our way,” Mr. Carbonetti said. “We have helped a number of people interested in investing in New York in recent years.”

Mr. Carbonetti said he was aware that should Mr. Giuliani choose to run for public office in the future, his business connections would be closely scrutinized, as they had been in the presidential campaign. But he said he saw little possibility of conflicts growing out of the fund.

Mr. Giuliani is not likely to be involved in the day-to-day management of the fund, but will help bring in investors.

Mr. Carbonetti said the fund would look for undervalued properties in prime neighborhoods. The company believes the current turmoil in the market, with banks hesitant to extend loans and prices falling, presents an opportunity for investors with large amounts of cash at their disposal, Mr. Berman said.

The real estate markets in Washington and New York City have some significant differences, Mr. Berman said. The market for office space in Washington has proved resilient, he said, in large part because the federal government always needs space, while New York has been buoyed by international investment and has not seen as sharp a downturn in its housing market.

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