In a bid to take advantage of what it sees as a strong and secure nationwide real estate market, the National Bank of Washington yesterday announced the formation of a real estate investment trust made up of contributions from a number of union pension funds.

The aim of the new fund, said NBW Chairman Luther H. Hodges Jr., is to help the so-called multi-employer pension funds join forces in the real estate market so they can undertake larger projects, retain better real estate investment advisers and spread the risk to individual investments.

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Hodges said the bank is "uniquely situated" to attract union-related funds. Owned 75 percent by the United Mine Workers Union, NBW touts its position as the nation's largest bank with a unionized work force. The new fund's prospectus affirms that "new construction selected for inclusion in the trust will be union-built and union-serviced."

Butler said the bank hopes to get the first commitments from multi-employer funds -- which are negotiated between unions and a group of employers -- by fall."I think you'll see the first projects by January," he said.

The trust, which is the first of its kind in the Washington area, will focus its efforts on buying and selling properties, rather than financing and overseeing new construction, Butler said. Such properties might include undeveloped land as well as new buildings acquired under agreements to buy them at a set price upon their completion.

The bank aims for a nationwide real estate investment effort, and Butler said it "doesn't intend" to concentrate on Washington's strong real estate market. "In real estate," he said, "you need to be diversified like in anything else."

Butler said the trust will extend the benefits of diversification to pension funds that were too small to take advantage of them alone. "If you have a $100 million fund, you might prudently put $10 million in real estate, he said. "That $10 million won't buy you a very diversified portfolio."

For advice on which parcels to buy, the trust will rely on Kennedy Associates Real Estate Counsel Inc., a Seattle-based firm Hodges said the choice of a western firm underscored the trust's national scope.

"Real estate's really been the steadiest hedge against inflation for the last decade," said Butler. NBW's trust will join about $5 billion in similar real estate-oriented funds nationwide.