ANCHORAGE - Faced with the downturn in the stock market, several Native corporations are reconfiguring their moneymaking strategies and looking to Outside real estate opportunities.
Several Native firms are snapping up commercial office buildings in the desert Southwest and other Lower 48 high-growth regions, taking advantage of the lowest interest rates in decades, according to the Anchorage Daily News.
Three years ago Koniag Inc., the regional Native corporation for the Kodiak area, had 80 percent of its assets in stocks and bonds. The company reshuffled its portfolio and now keeps only 35 percent in securities. A whopping 40 percent is socked away in real estate, with more than a dozen properties in Alaska, Washington, New Mexico, Arizona and Utah.
Koniag used to make the bulk of its cash off old-growth timber and stocks, but the company's managers anticipated hard times in both arenas.
"We realized it wouldn't last forever, and it didn't," said Dennis Metrokin, Koniag president.
Carlton Smith, former chief executive of Kootznoowoo Inc., the village corporation for Angoon, is a Juneau real estate broker. He said he's busy lining up clients from among the more than 225 Native corporations born out of the Alaska Native Claims Settlement Act of 1971.
Few real estate investments are risk-free, as Native corporations and other Alaska investors well know. Bitter memories of the late-1980s economic crash in Alaska still haunt people who turned over the keys to their houses and condos to banks when the properties plummeted in value.
Even so, many Native companies have shifted from stocks, bonds and operating companies into commercial real estate and government contracting, said Smith, who also is a vice president with Mammoth Equities of Mission Viejo, Calif.
Koniag is among the Native firms that have partnered with Mammoth in commercial real estate in Arizona, California and Nevada. Ouzinkie Native Corp. has also invested in a private real estate fund Mammoth is rolling out, said Mike O'Connor, president of the Native village corporation.
"We like real estate because once a property has been fully developed and the revenues and expenses have stabilized and you're operating full speed, it's a fairly constant and fairly reliable stream of income as opposed to stocks," O'Connor said.
Kootznoowoo will also likely invest in the Mammoth fund, said president Bob Hamilton. Huna Totem Corp., MTNT Ltd. and up to a dozen other Native firms are considering the fund, several insiders said.
Real estate funds allow investors to own a percentage of a building or group of properties, thus lowering the risk if the deal goes sour. The funds can offer a mix of property types, such as multi-tenant commercial, warehouse, apartment or business park.
The buildings are often in different cities or regions to provide geographic diversity.
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