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2011 SMA Specialty Manager of the Year: Forward Uniplan REIT

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Specialty  2011 SMA Manager of the Year
Forward Uniplan Advisors
Uniplan REIT Portfolio

Throughout the month of April, AdvisorOne will focus on separately managed accounts: the money manager options advisors have, the platforms through which they can gain access to those managers, how they can conduct due diligence on those managers, and how advisors are using SMAs in client portfolios.

We begin our coverage by presenting the Investment Advisor-Prima Capital seventh annual Separately Managed Account Managers of the Year. In a feature article in the April 2011 issue of Investment Advisor, seven managers in six different asset classes were chosen as "A Class Apart."

(See the complete calendar of our Special Reportfor past and upcoming coverage.)

In this article, we focus on Union Grove, Wisconsin-based Forward Uniplan Advisors, winners of the specialty manager award for its REIT portfolio

The philosophy: To provide REIT investors with superior long-term risk-adjusted returns, building a portfolio with lower risk than the REIT benchmark, and balancing investments across sectors, and providing stronger returns during a market cycle.

The portfolio: Investing in publicly traded companies through REITs and REOCs, Remaining sector neutral to the NAREIT Equity REIT Index, the investment team seeks to add value by identifying and investing in the best properties and best REIT management teams geographically.

The performance (company supplied):

2010 Gross Returns: 23.55%

Assets in portfolio: $288.1 million

Total assets under management: $435 million (as of 11/10, see company Form ADV)

The people: Investment Advisor Editor John Sullivan spoke in March with Richard 'Rick' Imperiale, CFA, founder, president and portfolio manager. Additional team members include Rick Govern, assistant portfolio manager and senior research analyst, and John Komives, PhD., senior research analyst.

Specialty Manager Award
Forward Uniplan Advisors
Uniplan REIT Portfolio

The second time’s the charm, even more so for Forward Uniplan Advisors, as this is the firm’s second SMA Manager of the Year award in as many years, though in a different sector.

“The team started out in the balanced portfolio space,” says president and portfolio manager Richard “Rick” Imperiale (above). “Our REIT portfolio came out of that.”

It’s a good thing, since REITs are what won them this year’s award. REITs, according to Imperiale, raise portfolio returns while lowering volatility, something any introductory 101-investor should like, but getting the message out still takes a concentrated effort.

“Our first order of business is educating advisors to the benefits of REITs in the portfolio,” he says. “Real estate is always local. New York always seems to never have enough office space. Chicago, on the other hand, always seems to have too much. It would be nice to simply transfer that capacity from New York to Chicago, but as we all know, it doesn’t work that way.”

Understanding those supply and demand fundamentals are critical, he says, as are the


products to best address those fundamentals.

Once the firm solves for location and geography issues, it moves to more qualitative issues; meaning the quality of the management team and how they’ll take advantage of the relatively good real estate outlook in their local market.

“Just as advisors evaluate us when looking for help in managing the REIT portion of their portfolio, we, too, evaluate REIT managers to ensure the right fit,” Imperiale says. “That qualitative analysis is something, I feel, that’s a bit different from how other managers evaluate the opportunities in the space.”

Prima would seem to agree, and notes Forward Uniplan has one of the longest and most consistent track records in the SMA REIT peer group, and has outperformed the Wilshire REIT Index 18 times in the last 22 years. The boutique firm manages roughly $500 million in assets, with $288 million in the REIT portfolio.

Prima considers Imperiale to be a pioneer in REIT investing and his extensive experience, willingness to move to cash in turbulent market environments such as 2008, and consistent sell discipline are the chief value-adds for the strategy. Imperiale and his team of six blend macro/microeconomic, quantitative and qualitative analysis to construct a concentrated (25 to 35 holdings), benchmark-aware portfolio with low turnover. The REIT strategy has had tremendous success throughout its history, with top quartile annualized alpha over all trailing time periods in the last 10 years.