Leading Off (2/18/13)

Is the Dallas Police and Fire Pension System Overinvested in Real Estate? There are so many questions raised by this lengthy report on how the pension fund that owns Museum Tower ended up managing the luxury proprieties it propped-up with large cash infusions after the real estate bubble burst. For example: What are the properties really worth now? Should the pension fund be managing Hawaiian estates and Napa Valley resorts? Is fund administrator Richard Tettamant having too much fun hobnobbing on the taxpayer’s dime? If speculative land plays don’t pan out, is it really accurate to report them as investments in “natural resources?” Is Tettamant cutting sweetheart deals for developer buddies? Are his efforts to beat market returns putting the future of the our city’s finest – not to mention the pocketbooks of Dallas taxpayers – at considerable risk? Lots of questions. But here’s the one I want to ask: did the fund really need to pay to move a piano from Hawaii to the lobby of Museum Tower? I mean, they sell pianos in Dallas, right? Really nice ones, I bet.

As American Swallows U.S. Airways, Airline Field Thins: There was a time when airports were packed with brands like Pan Am, TWA, Eastern, Braniff — all of which have gone the way of the Concorde. Now the “extraordinarily complex” merger between American and U.S. Air leaves just four major carriers: American, United, Delta and Southwest.

Tim Tebow to Speak at First Baptist: The announcement that the incredibly meh quarterback will speak at Robert Jeffress’ First Baptist Church raises all the expected questions about whether or not Tebow endorses statements Jeffress has made in the past about homosexuality, Mormonism, Islam, and on and on. And I suppose those are pertinent questions to ask, even if I wish the only question surrounding anything regarding Tim Tebow was “who cares?”


  • Barry

    As I wrote in the DMN blog yesterday,The Dallas Police and Fire Pension system has grown from $719 million in managed assets 20 years ago (when Tettamant took over as administrator) and has grown to $3.65 billion (b-billion) in assets today. That does not happen by accident or poor management, just the opposite.
    You notice since the economy took a dive, while many pension and retirement funds across the country went broke, became deeply underfunded or just folded, the Dallas Police and Fire Pension system out performed most. Don’t take my word, The Texas Association of Public Employee Retirement Systems just published its yearly analysis and reported that DPFP system was the number one performer over the past 20 years with a 9.11% annualized return. That’s not the middle of the pack, that is the top of the heap in Texas. But wait, there is more, the NEPC, the nation’s largest and most respected independent institutional investment consultancy, just published its yearly analysis of public pensions, and found the DPFP in the top 16% nationwide, that means it out performed 84% of all pension funds in the United States. That same group, the NEPC, placed the risk (or volatility) of the DPFP pension system int he top 12%, out performing 88% of all pension funds in the country.

    Did you notice, there is no talk of losing money here? That’s because when you have a diverse long-term or “far horizon” investment strategy spread over many asset types and classes, like the DPFP, your fund can still perform well despite periods of economic downturn for the nation and any asset class like real estate.

    About travel and your assertion of Tettamant having fun “hobnobbing on the taxpayers dime,” total travel for the fund managers and trustees was $185-thousand for 2012. They are are performing their fiduciary responsibility both vetting and managing assets and investments, and divided between those 17 people, that amounts of less than a grand a month per person to vet and manage these investments and owned assets. Sounds like a good bargain to me.

  • mynameisbill

    Maybe, Tebow is going to be the new youth choir director there?

  • Mavdog

    Barry, nice defense.
    You fail to mention however the reason the fund has not shown the same volatility as many others have shown: the fund does not adjust the value of the real estate it owns to market, they show the value of the real estate on a cost basis.
    sure, the market may come back to the values the fund acquired the properties for back in the day, or they may not. time will tell.
    there is no question the fund has too much of its money invested in real estate.
    and these sweetheart “consulting agreements”? ridiculous.

  • Wylie H Dallas

    Just because the Fund isn’t talking about the absolutely terrible real estate portfolio performance (or the inexplicable reasons the Fund is overexposed to the sector in violation of its own policy) doesn’t make the problems any less severe.

    The manner in which the fund originates, underwrites, structures and manages its real estate investments is indefensible and runs contra to best practices in a whole host of ways. Incredible amounts of value have been permanently destroyed (take for example the $4 million piece of Tucson land that was flipped to the Fund for $25+ million a few months later). You know, the land that lacks water and zoning?

    That is going to bring nothing but pain.