Mayor Bloomberg is free to invest in real estate — just not in New York City.
According to a decision released earlier today by the city’s Conflicts of Interest Board, the mayor can invest in real estate as part of a move to diversify his portfolio. But, if he wants to invest in New York City real estate he’ll have to come back to the board for a second opinion.
The decision was part of an advisory opinion that allows Bloomberg to diversify his financial portfolio into hedge funds, private equity, real estate, and other investments as long as he does so through a third party to avoid conflicts of interest that could clash with his city business.
It came after Bloomberg — a multi-billionaire Who Owns A Townhouse On East 79th Street and two $40 million buildings on 78th Street and Madison Avenue for the Bloomberg Family Foundation — went to the board with a proposal to diversify his assets as he moves to increase his personal philanthropy through his new foundation.
According to the decision, Bloomberg’s new investments will be overseen by one, or perhaps a few, investment firms, which will choose a third-party asset manager.
The managers will have the authority to make decisions without consulting the mayor. Bloomberg will be involved in making decisions about general assets, but not the specifics. The arrangement is designed to shield Bloomberg from having any knowledge of the fund that he and the Bloomberg Family Foundation own and from even knowing who controls his investments.
Bloomberg’s billions have made him something of a case study for the Conflicts of Interest Board. When he took office in 2002, he stepped down as head of his financial services company, Bloomberg L.P. and divested all of his publicly-traded stock to avoid potential conflicts.
For the last several years, in addition to his many properties throughout the country and world, he has been invested only in professionally-managed mutual funds and exchange-traded funds, which he could not influence as mayor.
The Conflicts of Interest Board declined to comment on whether Bloomberg came to them before he bought the two buildings for his foundation on the Upper East Side in 2006 and in 2007. It is unclear whether the board views that as a real estate investment.
The ruling goes far beyond his real estate decisions and could have significant implications on his overall investment strategy.