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Church Acquires Commercial Property in Texas


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For those interested, the church has purchased this 500,000 SF office campus in the Dallas area.  It is leased to Raytheon through 2026 so, presumably, it was acquired for investment income.  The purchase price was not disclosed in the article - it should be a matter of public record but I'm not inclined to go research it.  I would expect that it is north of $100 million.

https://www.dallasnews.com/business/real-estate/2017/08/07/raytheons-richardson-campus-cityline-sold

 

1501881280-raytheonoverhead.jpg

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18 minutes ago, rockpond said:

For those interested, the church has purchased this 500,000 SF office campus in the Dallas area.  

"Let's go shopping"

Uhhhh......    Any ideas?

Edited by cdowis
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I'm having a difficult time understanding the church's focus on investment and wealth accumulation. The more I see stories of church investments and business dealings, the more it bothers me.

It makes me think of the father who neglects his children because he works at the office 12 hours a day to provide for them. Of course the children benefit financially from their workaholic, money-focused father, but church members receive what? Access to church internet resources? Access to ancestry.com? The father may have great intentions and truly wish to support his family and provide them with financial security, but there are opportunity costs.

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2 hours ago, rockpond said:

For those interested, the church has purchased this 500,000 SF office campus in the Dallas area.  It is leased to Raytheon through 2026 so, presumably, it was acquired for investment income.  The purchase price was not disclosed in the article - it should be a matter of public record but I'm not inclined to go research it.  I would expect that it is north of $100 million.

https://www.dallasnews.com/business/real-estate/2017/08/07/raytheons-richardson-campus-cityline-sold

Why is the estimated purchase price of interest to you?

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I was in Dallas, TX recently and think I may have driven past the place the church bought.

I heard recently that the church owns more commercial entities than any other church. I'd like to see the church doing more on the humanitarian side also. I know they do, but could do so much more with the billions.  

 

Edited by Tacenda
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1 hour ago, clarkgoble said:

Investments almost certainly. 

I don't understand that. Within a couple of decades there will be far more members outside of the US than within it. Many of those members will be relatively poor. That entails that from a purely accounting perspective on average members outside the US will be a drain on resources (or need more spent on them than they put in with tithing). US members put more in, but growth in the US is slowing, is dead for the most part in Europe, and is in the middle in Canada/Australia. While it seems right now the Church has a lot of money, much like an insurance company, it has to think in terms of long term expenses by looking at demographic predictions. This pretty well entails finding solid investments to increase return.

I understand those who think the money ought be spent now for charity purposes. But that's really not that far removed from the sort of thinking in the 60's that nearly bankrupted the Church. Most of the current Apostles were alive when that happened so the reality of not having enough funds for building, overbuilding, and not investing intelligently enough is still very much on their minds even if its been years since Pres. Tanner came in and saved the Church.

Now clearly they don't only look at it as pure investments. I think the City Creek project was as much an attempt to keep Salt Lake City's downtown area near the Temple from collapsing and thereby affecting people's willingness to visit the Temple grounds. But by and large if you look, outside of perhaps mysterious purchases in the Missouri region in the 90's, the investments are finding underpriced properties, collecting rent, and selling them when prices are high. 

I'm not saying that this land is purely investment oriented. For all I know maybe they plan a Temple in the future. But short term that's what it appears like.

I think lack of transparency is at issue.  If in 20 years the Church is better off financially then it is now, but has less members are we doing the right thing now?  As of the past couple of years the world is growing at a faster rate than the Church, which hasn't happened for a near century. That feels worthy of being a really big concern.  If that trend continues, indeed the last five years have seen continual decline each year, then the goal and focus seem misdirected.  While the Church is growing in certain areas of the world, it is struggling in some of the historically prosperous areas.  There are reasons for that, I think.  it feels like there's a better focus and more noble goal to pursue. 

Now it's possible the noble goal, better focus might be there, but we don't know that.  All we see are occasional efforts to revitalize faith by telling us we need to be better at keeping the Sabbath, and then we hear of them buying land and commercial in Florida, Philadelphia and Dallas.  All of this while most often sending the message all is well in Zion.  And we can't see a dang thing.

Edited by stemelbow
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1 hour ago, clarkgoble said:

Investments almost certainly. 

I don't understand that. Within a couple of decades there will be far more members outside of the US than within it. Many of those members will be relatively poor. That entails that from a purely accounting perspective on average members outside the US will be a drain on resources (or need more spent on them than they put in with tithing). US members put more in, but growth in the US is slowing, is dead for the most part in Europe, and is in the middle in Canada/Australia. While it seems right now the Church has a lot of money, much like an insurance company, it has to think in terms of long term expenses by looking at demographic predictions. This pretty well entails finding solid investments to increase return.

I understand those who think the money ought be spent now for charity purposes. But that's really not that far removed from the sort of thinking in the 60's that nearly bankrupted the Church. Most of the current Apostles were alive when that happened so the reality of not having enough funds for building, overbuilding, and not investing intelligently enough is still very much on their minds even if its been years since Pres. Tanner came in and saved the Church.

Now clearly they don't only look at it as pure investments. I think the City Creek project was as much an attempt to keep Salt Lake City's downtown area near the Temple from collapsing and thereby affecting people's willingness to visit the Temple grounds. But by and large if you look, outside of perhaps mysterious purchases in the Missouri region in the 90's, the investments are finding underpriced properties, collecting rent, and selling them when prices are high. 

I'm not saying that this land is purely investment oriented. For all I know maybe they plan a Temple in the future. But short term that's what it appears like.

This purchase does seem like a solid investment property with a lease guaranteeing a steady income for the next ten years, and likely well beyond that.

Other purchases, take the large land acquisitions in Florida for example, are more intriguing to me.  Those purchases don't yield much of an income and could possibly be draining time and money.  The plan seems to be some large scale development which could pay off in a generation or two.

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I think they are being very practical here. They need solid revenue sources if their tithing revenue should dip in the future and they seem to be making moves along these lines. Even if one doesn't factor in the loss of millenials and others and how that will shape future tithing revenue, incomes have fallen or stagnated over the last 30 years or so, except for those at the top of the pyramid. So, they have got to plan on lower revenue going forward from the membership.

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3 minutes ago, rockpond said:

This purchase does seem like a solid investment property with a lease guaranteeing a steady income for the next ten years, and likely well beyond that.

Other purchases, take the large land acquisitions in Florida for example, are more intriguing to me.  Those purchases don't yield much of an income and could possibly be draining time and money.  The plan seems to be some large scale development which could pay off in a generation or two.

Yeah. My guess is that they're looking at investments that will pay off over 50 years. So they're gambling that various city centers will expand making the property worth far more. I just don't know enough about real estate to have an opinion about how wise an investment this is. Presumably though they are getting presentations from people who spell out the details. Hopefully they're comparing it with investments that pay 3% or so per year. It may also be a way of hedging other investments. These may well be very safe investments to offset riskier investments that may have a higher return. I don't know.

I know back when it became clear in the 90's that the Church was buying up a lot of land of Missouri through shell companies that people saw it in millennialist terms. I always saw that as a bit of nonsense. While some land might be for visitor locations in general I suspect they just use shell companies so people don't see it's the Church buying property and raise the prices. That in turn relates to the transparency issue as there are very practical reasons the Church doesn't want many of its investments to be known.

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13 minutes ago, MorningStar said:

What if your father invested in properties for your future financial security and it didn't take him away from his family?  Would you be annoyed if he had more money vs. less money available to you?  What are we losing out on by the church investing?  

If my father was largely absent from my life in a pursuit of gathering money for my future, I'd want to talk to him about it. I think it would be worth a conversation...at least. That option isn't available with the church.

What are we losing?

Resources are limited. Every resource that is tucked away into a future investment is a resource not being utilized for current needs.

If the church is so concerned about not having funds to run the church in the future and therefore must invest heavily to maintain current practices of supplying buildings and infrastructure, it seems to me that they may want to reduce financial needs. If membership decreases there won't be the same need for church buildings or temples. If membership grows primarily in third world countries it will likely be cheaper to build there. Expenses may be covered by selling unnecessary real estate/buildings etc. Those things that were once needed, but are no longer needed. But investing in real estate solely on the basis of speculative investment seems to lose the soul of what a church is supposed to be about

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11 minutes ago, clarkgoble said:

I'm not a person who thinks transparency is the be all and end all. Indeed I think the well intentioned goal of more transparency in politics has actually made things worse and let to Trump. Also it's not quite clear what people mean by transparency. It's not that hard to figure out where the Church is growing and where it's not nor figure out the implications from that. 

But I'll confess I'm not 100% sure what exactly you are saying. By "better focus and more noble goal" I assume you think the Church should be doing something differently. But differently how? And why would someone interpret from an investment purchase that "all is well in Zion?" I'm not saying people might not think that - but if they do it is pretty shoddy reasoning. It would seem that's the real issue - bad reasoning - rather than the investment property purchases being wrong.

Well I appreciate the response.

I didn't say I interpreted the investment purchase that all is well in Zion.  I indicated one clear message we often get, like in our General conferences and other addresses, that all is well in Zion.  I'm not sure how else to interpret the general theme of the messages to be honest.

I think odd for you to argue against transparency because of what led to Trump, as if that will happen to the Church.  I'm not even sure what you are trying to say there.  If the Church tries to be transparent, which in some ways it does, we'll get a Trump on our hands?  The country is much different than the Church. 

But this is interesting:

"It's not that hard to figure out where the Church is growing and where it's not nor figure out the implications from that. "

I would say that's way hard.  But I also think the really shallow efforts to explain it aren't really addressing the issues.  So what do you mean?  What is so easy for you to know that the rest of us might not?

 

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5 minutes ago, clarkgoble said:

Yeah. My guess is that they're looking at investments that will pay off over 50 years. So they're gambling that various city centers will expand making the property worth far more. I just don't know enough about real estate to have an opinion about how wise an investment this is. Presumably though they are getting presentations from people who spell out the details. Hopefully they're comparing it with investments that pay 3% or so per year. It may also be a way of hedging other investments. These may well be very safe investments to offset riskier investments that may have a higher return. I don't know.

I know back when it became clear in the 90's that the Church was buying up a lot of land of Missouri through shell companies that people saw it in millennialist terms. I always saw that as a bit of nonsense. While some land might be for visitor locations in general I suspect they just use shell companies so people don't see it's the Church buying property and raise the prices. That in turn relates to the transparency issue as there are very practical reasons the Church doesn't want many of its investments to be known.

My career is commercial investing and development.  So I have a bit of experience in this.

Hopefully the church is not investing in things that are only paying 3% per year.  That would be unwise.  This Dallas investment would be considered a very secure source of income - probably a 5% to 6% return.

Since US law makes corporations a matter of public record, it's difficult to hide the buyer with a shell company.  But, a purchase price can be negotiated without revealing the identity of the buyer.  Property ownership is also a matter of public record so it is difficult to hide that although I think the church has quite a few levels of corporate hierarchy that helps.

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10 minutes ago, HappyJackWagon said:

If the church is so concerned about not having funds to run the church in the future and therefore must invest heavily to maintain current practices of supplying buildings and infrastructure, it seems to me that they may want to reduce financial needs. If membership decreases there won't be the same need for church buildings or temples. If membership grows primarily in third world countries it will likely be cheaper to build there. Expenses may be covered by selling unnecessary real estate/buildings etc. Those things that were once needed, but are no longer needed. But investing in real estate solely on the basis of speculative investment seems to lose the soul of what a church is supposed to be about

Presumably the Brethren have some idea of where the church is headed in terms of membership and finances.  Based on responses here and elsewhere, it seems that most members who are aware of the church's real estate investments believe that they are creating a healthy "rainy-day fund" for some future time when the church may not be able to sustain itself from tithing.  Makes sense.  As you point out, there are other ways to mitigate the risk:  One of those would be to reduce the creation of massive money-draining edifices.

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1 minute ago, rockpond said:

Presumably the Brethren have some idea of where the church is headed in terms of membership and finances.  Based on responses here and elsewhere, it seems that most members who are aware of the church's real estate investments believe that they are creating a healthy "rainy-day fund" for some future time when the church may not be able to sustain itself from tithing.  Makes sense.  As you point out, there are other ways to mitigate the risk:  One of those would be to reduce the creation of massive money-draining edifices.

A rainy day fund is understandable. But when is it enough? Billions of dollars in investments? Is that a reasonable rainy day fund? Seems excessive to me, but that's obviously just an opinion.

I would prefer for my church by have more teachers, philosophers, theologians on staff than they do bankers and MBA's who are focused on growing wealth.

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3 minutes ago, HappyJackWagon said:

A rainy day fund is understandable. But when is it enough? Billions of dollars in investments? Is that a reasonable rainy day fund? Seems excessive to me, but that's obviously just an opinion.

Right... an we have no idea how our "rainy day fund" compares to tithing income because none of that has been available to us for the past six decades.

4 minutes ago, HappyJackWagon said:

I would prefer for my church by have more teachers, philosophers, theologians on staff than they do bankers and MBA's who are focused on growing wealth.

Yes, and right now it is easy to see how that could have yielded great returns for the church membership.

 

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5 minutes ago, Storm Rider said:

First, the Church did not buy it - a real estate investment company - whose sole purpose is to invest in real estate - bought the property.  The invest company is owned by the Church, but its function is investments.  

Yes... as noted in the article I linked:  "It's been purchased by Property Reserve Inc., a real estate and investment arm of the Church of Jesus Christ of Latter-day Saints."

5 minutes ago, Storm Rider said:

The actual price of the property is irrelevant.

Irrelevant to whom?  Obviously it is important to some parties.  As I stated earlier in the thread, it is most likely a cap rate investment in the 5% to 6% range.

5 minutes ago, Storm Rider said:

They are sharp investors with a conservative approach to real estate investing.  

I have no doubt.

Edited by rockpond
spelling correction
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26 minutes ago, Storm Rider said:

First, the Church did not buy it - a real estate investment company - whose sole purpose is to invest in real estate - bought the property.  The invest company is owned by the Church, but its function is investments.  

The actual price of the property is irrelevant.  I know the group and dealt with them in my previous professional life. They are sharp investors with a conservative approach to real estate investing.  

To be fair, I think the lines clearly blur for the Church on this. 

Quote

Shortly after, fliers went out to ward houses across New Zealand promoting a "fireside," typically a discussion on scriptural issues. However, this meeting was led by top Property Reserve, Inc. officials touting the Temple View development to church members. A local church member secretly recorded the meeting and gave it to Puriri, who posted the audio on his blog.

An American consultant for the church, Don White told the Hamilton stake center audience that the objective of the development was "the protection and sanctity of the environment of the temple." He continued, "All the projects we are focusing on tonight are tithing-funded projects," decisions that could only be made by the church's top leadership, to whom the three men reported.

https://www.cityweekly.net/utah/warrior-spirit/Content?oid=4802182

There was also some involvement from Elder Hamula:

Quote

LDS church leaders have repeatedly said no tithing money was spent on City Creek—so were the presenters in New Zealand telling the truth, or not? Elder James J. Hamula offered Puriri an explanation in an email, albeit one that left him troubled. A new stake center was indeed coming out of tithing funds, whereas the rest of the project—homes, townhouses, some retail—was through non-tithing money. "Thus the statements made by PRI representatives that you have been concerned about and copied me on, while perhaps imprecise, are not really inaccurate," Hamula wrote.

not to get us off topic but that other thread is closed.  perhaps this is part of what has gotten Hamula in trouble.

 

 

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