80's investor waits for new opportunities.

During the 1980's, while a general partner with Lazard Freres & Co., Inc., Harvey Schulweis invested some $2 billion in equity on behalf of a Lazard-sponsored private real estate investment trust. Now, as head of his own firm, Schulweis Realty, Inc., he is itching to buy the first property for himself and fellow investors. And he is hoping to do it this year.

"We are zero for the 90's," said Schulweis who was president of Lazard Realty, Inc. before opening the doors of his own firm in 1991. "We don't expect that's how it's going to end up."

While there are many opportunities to buy and revive distressed assets, Schulweis said he is taking a tough, disciplined approach due, in part, to the lingering credit crunch that forces investors to put up a tremendous amount of equity.

"The absence of liquidity forces you to be extremely careful," said the be spectacled Schulweis.

In addition, he said, there is not a clear bottom in value and many sellers of troubled properties are still using a "pre-90's" basis for evaluation.

"Our history has not been to overreach for properties," he said.

Armed with its own capital and the capital of others, Sehulweis Realty is seeking opportunities to invest in large and "important" individual assets located in the Northeast, from Boston to Atlanta, and as far west as Chicago.

Schulweis was with Lazard for 20 years, the last 10 as a general partner. Now, joined by his three most senior Lazard associates, he is focusing on, in addition to investment, tenant advisory services and asset management.

In two of the more significant deals of 1992, Schulweis and his team served as consultant to J.W. Seligman in its move from the Wall Street area to Midtown and Ernst and Young in a consolidation move from 277 Park Avenue to the Equitable Center.

Schulweis Realty serves as asset manager and, in some cases, property manager for some 4 million square feet most of the portfolio accumulated by Corporate Property Investors, the Lazard-sponsored private real estate investment trust. Schulweis helped form the fund and was general partner in all the real estate it acquired or developed. The fund was comprised of capital from within Lazard and from outside sources, the most significant of which was a large European insurance company.

The acquisitions, located primarily in the Mid-Atlantic region, included 11,000 apartment units from Monumental Life Insurance Company in 1979. Also in 1979, they acquired, in Manhattan, five properties from Tishman Realty and Construction Company, including interests in 666 Fifth Avenue, 919 Third Avenue, and the parking lot that became 520 Madison Avenue.

One of the fund's most ambitious, yet disappointing, ventures was to assemble the land for and to develop the $150 mill ion International Design Center on a 10-acre site Long Island City. The complex was originally conceived as back office space for Manhattan's financial district, but the recession of 1982 and the contraction of the securities industry led to a change in direction. What would eventually transpire from the former industrial site and factory buildings was 1 million square feet of showroom space for the interior furnishings industry. The project, which opened in 1985, received the largest Urban Development Action Grant.

Designed by Guathmy & Siegel, the "IDCNY" -- as it became known -- won praises for its architecture and the pioneering nature of the development. But then came the recession and the real estate downturn, which resulted in a major decline in the furniture industry and major problems for the project. This all caused a strain on Schulweis long and otherwise successful relationship with Lazard.

"That industry has been all but decimated by the recession and is a fraction of the size it once was," he said.

Despite the infusion of significant amounts of equity and securing the New York School Construction Authority as a major tenant, a lending consortium led by the Bank of New York last month began a foreclosure proceeding against the project. While restructuring negotiations continue between the Lazard partners, the lending consortium and the city, which stands to lose $23 million in loan dollars, the bank has taken the management and leasing responsibilities out of the hands of the developer and has turned them over to S.L. Green Real Estate.

Meanwhile, a 1 million-square-foot loft building acquired as part of the original transactions has since become the site of a major facility for LaGuardia Community College. The assemblage also includes a 90,000-square-foot site that the Urban Development Corporation has approved for future development.

But, of his investment record, Schulweis reports that he has made almost $600 mill ion in cash distributions to investors in his deals and recorded a pre-tax cash basis internal rate of more than 33 percent during the more than 13 years he invested for Lazard Realty. He also notes that in three separate years in the $80's his investments generated $100 million for his partners. And, since they did not make any investments after 1986 or 1987, they are not reeling from the problems.

Active in Causes

Schulweis devotes a lot of time to civic and philanthropic affairs. Involved in the United Jewish Appeal Federation for 15 years, he has been past chair of the general campaign and vice chair of the real estate division, which recently honored him with the 1993 Jack D. Weiler Award. 'He is also currently chairman of the Jewish Foundation for Christian Rescuers of the Anti-Defamation League and is on the board of Riverdale Country Day School.

Active in industry-related causes, Sehulweis spoke to REW fresh from a trip to Washington where, as a board of trustee of the National Realty Committee, he met with members of Congress to discuss Clinton's economic stimulus and deficit reduction proposals. Of major concern, he said, is reforming the passive-loss rules.

"We try to do what we can to see that good legislation is passed," he said.

Schulweis also said they are trying to stop Congress from passing any lead abatement legislation.

"We have the federal government involved in real estate in a way that could bankrupt the industry, bankrupt the city of New York," he said.

Schulweis said he will continue to analyze opportunities and wait patiently before making any investments. In the 90's, he said, there are no blanket statements to be made about any market or property type. Many investors, he said, are paying for the generalizations made in the 80's.

"Everything was good; nothing was wrong. And the people who made them are no longer around."