When Jerry Reinsdorf, Robert Judelson and Thomas Meador opened the investment firm Michigan Avenue Real Estate Group in Chicago five years ago, they were in a sense returning to their roots.

In the 1970s, Reinsdorf and Judelson's Balcor Company became the largest owner of apartments in the U.S., with assets of more than $7 billion. Meador joined the firm later, and stayed on after its acquisition by American Express in 1982. He directed Balcor's disposition for American Express, finalized in 1998, and then ran the company's global real estate for ten years.

Reinsdorf went on to become chairman of the Chicago Bulls and Chicago White Sox sports franchises, and Judelson to various real estate development activities.

Leveraging the principals' deep real estate experience, and staffed by seasoned professionals, including colleagues from the Balcor days, Michigan Avenue specializes in all areas of real estate investing and acquisitions. Its business plan, Meador says, is to accumulate high-net-worth capital and place it into opportunistic real estate investments.

It also consults for small community banks, mainly in the Chicago area, and national banks on how to manage their real estate portfolio problems. Many smaller institutions are encumbered with underperforming loans and real estate assets and often lack the staff, capacity or expertise to deal with them. Michigan Avenue also has a land development program.

Judelson serves as the firm's chairman, and Meador as president and chief executive. Reinsdorf is an inactive principal, but his son Jonathan is actively involved in the business.

Investment Process
Michigan Avenue has two fund products. Michigan Avenue Real Estate Investors LP invests in primarily residential bank portfolios-abortive condominiums and apartment projects.

"We have high-net-worth individuals who are savvy investors, who understand the market and understand what we're doing, and then we have product with the bank portfolios," he says.

Michigan Avenue culls bank portfolios and buys what Meador calls "good real estate"-assets with excellent location and design that have been mismanaged in some way. They may have been poorly timed or overleveraged, for example. These assets are not necessarily cheap, he says. "We try to buy it cheap, but cheap doesn't make it good," he says. And although the firm's focus is on banks, it has bought real estate from a private owner who decided to monetize his assets.

The firm's geographic focus is Chicago and its suburbs, Milwaukee and Indianapolis. It also has a presence in Denver and Atlanta, but it has not yet aggressively pursued these markets "because we've just had enough on our plate here in Chicago," Meador says. The firm has about 30 assets in its portfolio. The term of each project is five to seven years.