Dallas Police & Fire Pension Fund Says it Has "Several" Offers to Buy Museum Tower

Categories: Development, Shiny

Museum Tower Thibodeaux.jpg
Photo by Brandon Thibodeaux
Every month, the Dallas Police and Fire Pension System's board of trustees convenes at the break of dawn for its regular meeting. On a scale of exciting-ness, that meeting usually ranks somewhere between scrubbing the mold from one's bathroom tiles and looking at the photo album my aunt used to keep of her lawn. At the first sign of anything interesting taking place -- namely, any mention of Museum Tower -- the board immediately goes into closed session and kicks everybody out of the room.

That's exactly what happened again today, on the heels of a piece last week in the Morning News reporting that the project may have an interested buyer, namely developer Jack Matthews. After approximately 700 years of bickering with the neighboring Nasher Sculpture Center about light, heat bouncing from the shiny tower, the pension fund may have an out, if they choose to take the offer.

Pension fund administrator Richard Tettamant wouldn't say much to us about the Matthews bid, apart from confirming that it's "one of several" they're considering.

"Everything the pension fund owns is for sale if the right offer comes in," Tettamant said. "Our role is to invest, build them, and when the time comes, sell 'em."

Despite the sales offers, Tettamant said, "We still have a team of scientists looking at solutions." As he spoke, he glanced occasionally over my shoulder at WFAA reporter Brett Shipp, who showed up at the meeting with a camera guy in tow. Shipp cheerily stalked the halls with a large, fuzzy microphone, trying without success to get an on-camera interview with the board chairman George Tomasovic, who appeared to be trying to avoid him. Meanwhile, the pension fund's lawyer told DMN reporter Steve Thompson, a little irritably, that it would be "inappropriate and stupid" to answer questions about anything that was discussed in the closed session.

It was all tremendously entertaining. Best board meeting in months, really.

Meanwhile, the pension fund and Museum Tower's marketing folks also continue to be tight-lipped with the reporter hordes about just how many condos in the building have sold thus far. MT spokeswoman Rebecca Shaw told us today that that number is "several." (We also just got a press release from the Museum Tower public relations team, telling us that a new realty firm has been hired, Briggs Freeman Sotheby's, as part of the building's "2013 strategic plan.")

Tettamant said that the board should have a "plan of action" by February's meeting. Can't hardly wait.


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6 comments
benwellsstreet
benwellsstreet

when it was finally finished, it was hard for me to beleive. a $1000/sq ft highrise surrounded by a moat-like freeway exit with nothing but a crowded public park jammed with food trucks in the front of the building? I don't think the police and firemens pension fund understand what luxury is.

It's the height of arrogance to build something called "museum tower" and give zero thought to the ...museum... that is the next door neighbor.

perhaps once the pension unloads it and the next guy goes through bankruptcy, somebody can pick it up on the cheap and drop the rates to something that makes sense in the dallas market.

WylieH
WylieH

A review of DCAD records reveals the following:

1)  Not a SINGLE unit has been sold (there is a bit of a lag in property ownership data, but they are reasonably up to date--- if any units have been sold, this would be a very recent development).

2)  The property is carried on DCAD tax rolls at less than $64 million, in total.

MikeWestEast
MikeWestEast

It is not clear what is for sale, the insignicant equity in the managing corp or the amount of the loans that the Pension Fund is the cosigner.  The likely deal is Matthews overpaying for the equity, only 100K, so Pension Fund could claim a "profit" and Matthews assuming some portion of loan risk for outsize portion of cash flows when buyers pay in.  That is the "fire" sale.  Pension Fund holds pro rata more risk that its original pro rata share of the incoming cash.  The Pension Fund is not going to be clear of this building until those loans get repaid.  Jack Matthews does not have financial support to refinance and, if he did, would have had to pay a much higher rate than Pension Fund got because its sizable investments co-signed the $200 million.

NewsDog
NewsDog

I can't stand the irony that this pension fund is looking for a 'fire' sale solution. 

Sharon_Moreanus
Sharon_Moreanus topcommenter

Toured last week. Only one owner has moved in so far.

WylieH
WylieH

@MikeWestEast That's probably right.  One variation on this play (there are many) is that Matthews pays, say $2 million for the equity, leaving the Pension Fund on the hook for all the debt.  As a part of the deal, he get's to charge the Pension Fund, say, $4 million per year to act as the managing partner.

Initially, the Pension Fund claims a fake profit on the deal, but at the end of the day, Matthews clears a profit via management fees and the Pension Fund takes it up the choo-choo when it has to pay back all those full recourse loans (which vastly exceed the value of the property).  The key is that all this plays out sometime after Tettamant has retired into a highly lucrative retirement funded by the Pension Fund itself.

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