By Jim Bleyer
Florida’s public pension fund bailed out two prominent Miami developers linked to former governor and presidential hopeful Jeb Bush when it overpaid by tens of millions of dollars for an occupancy-challenged downtown Tampa apartment complex in February, 2014.
The $76.5 million purchase of the Pierhouse at Channelside was approved by the State Board of Administration and its trustees: Gov. Rick Scott, Chief Financial Officer Jeff Atwater, and Attorney General Pam Bondi.
Records at the Hillsborough County Property Appraiser’s office reflect a “just” value of the property at $30.95 million immediately prior to the pension fund purchase and $59.6 million following the sale. A representative of the Property Appraiser explained that appraisals usually are conducted every three years but a substantial difference between assessed value and a property transaction results in a more timely “value.”
The winner in the spurious transaction: The Related Companies, developers of Pierhouse, whose principals are major Republican financier and Jeb Bush bundler Stephen Ross and Miami “condo king” Jorge M. Perez, who so far has chipped in a quarter of a million bucks to Bush’s Right to Rise superPAC. An indirect beneficiary was Revolution Capital Group, the private equity firm that owns the failing Tampa Tribune whose political philosophy aligns with all the key players.
Losers: the more than one million current and retired state workers that are vested in the Florida pension fund.
Less than 18 months after Related unloaded its 40 percent occupancy white elephant, it purchased the Tribune headquarters at 202 S. Parker St., ostensibly for a 400-unit residential complex. The puffed up sales price was $17.75 million. According to the Hillsborough County Property Appraiser records, the most recent assessment for the Trib land and building was $3.91 million in 2015. Revolution Capital acquired the Tribune and its property in 2012 for $9.5 million with the property at 202 S. Parker valued at $3.872 million.
The daisy chain of real estate deals not only resulted in transferred wealth and overinflated property values in downtown Tampa but also provided a major political boost to Bush’s presidential aspirations as well as the three Board of Administration trustees who ran for re-election in 2014.
The property sale was fortuitous for Revolution, not to mention that The Tribune, Tampa Bay’s “second newspaper,” doesn’t turn an operating profit. Floridiocy speculated months ago that The Tribune would fold before the end of 2016. Revolution would have no reason to cling to a losing enterprise whose primary asset was sold for a handsome profit, essentially double what it forked over for all the newspaper’s assets three years earlier. Remaining in business until November, 2016, only makes sense if the Tribune promised to throw its editorial heft behind Bush in a pivotal state if he were the GOP nominee. At the time of the land sale, the Tribune said it would relocate its news operations in May, 2016 to pave the way for demolition and development.
The Tribune has strongly supported Bush during primary season. In a December 15 editorial entitled, “Don’t count out Jeb Bush,” the paper asserted that during a visit with The Trib’s Editorial Board, “Bush seemed the same as when he first energized the Florida Republican Party and revolutionized state government. He remains the analytical and determined champion of conservative values that he was when he turned Floridaâ€™s bureaucratic status quo on its head.”
The stunning array of superlatives concluded with, “Although Bush may not be the type to reduce the nation’s daunting challenges to provocative sound bites, he is a proven leader who isn’t afraid to take a stand with facts, figures and a plan of action.”
In 2014, the Tribune enthusiastically backed Scott in his bruising reelection battle with Charlie Crist. Bondi and Atwater grabbed Tribune endorsements as well.
Walker and Dunlop of Atlanta brokered the Pierhouse deal with the pension plan. Efforts to obtain a comment about the transaction elicited no response. Messages left for Jorge Perez at Related were unreturned.
Curiously, no broker was involved in the sale of the Tribune property to Related.
Perez has had more financial lives than the proverbial cat. The 2008 housing bust, with Miami as ground zero, nearly ruined him but bankers were reluctant to foreclose on his plethora of investments and become real estate magnates. After the market rebound, Perez reportedly invested in Brazil but the economy there has since tanked.
The incestuous web of transactions and personalities tied to the pension fund appears boundless. One contributor to Jeb 2016, Inc., is Donald McCarthy, CFO of Fir Tree Partners, the company where Ashbel Williams, Chief Investment Officer of the State Board of Administration, once served as Managing Director. Williams four years ago steered $125 million of state pension fund money to a hedge fund headed by a former Fir Tree client.
Williams was reappointed in 2012 by Scott, Bondi, and Atwater despite his resisting the hiring of an Inspector General for oversight of the State Board of Administration and questions about his operation’s lack of transparency.
Chuck Cobb, chairman of the Investment Advisory Committee that provides oversight of Florida Retirement System investments, was a big early donor to Bush’s presidential campaign and has ties to the Bush family spanning nearly three decades. As governor, Bush appointed Cobb’s wife as Secretary of State in 2005.
A side note: a Pierhouse leasing agent claims a current occupancy rate at 90 percent for the 356-unit complex. On my last visit on a weekday I observed two people in the exercise room and a dog walker. No one appeared in the spa, business center, pool or in my travels to and from the model unit. At a previous visit three months ago, there were no residents visible anywhere on the grounds. The leasing agent refused to provide even a rough demographic breakdown of the rental community.
(The writer is a retired State of Florida employee who is vested in the pension plan)