Bloomberg News

Anschutz Buys Out L.A. Hotel Partner at Loss to Teachers’ Fund

June 25, 2011

June 25 (Bloomberg) -- Philip Anschutz, who seeks taxpayer support for a $1.4 billion downtown Los Angeles football stadium complex, bought out a partner in his nearby hotel and condo project at a loss to investors including state teachers.

California State Teachers’ Retirement System, the nation’s second-largest pension plan, is an investor in a MacFarlane Partners fund that sold its money-losing interest last month in the Anschutz-led Ritz-Carlton and JW Marriott hotels and attached condominiums at the L.A. Live project, according to Ricardo Duran, a spokesman for the pension fund.

“It was sold at a loss, I don’t know how much,” Duran said in an interview yesterday.

The investment was made through MacFarlane Partners Urban Real Estate Fund II, which raised $1 billion from pension plans, insurance companies and a foundation in 2007, according to a MacFarlane press release at the time. Calstrs, with $154 billion in assets, committed $300 million to the fund in December 2006, Duran said.

The Urban Real Estate fund has 90 properties and 14 investors, according to Gregory M. Vilkin, managing principal and president of MacFarlane Partners. He declined to comment on the sale price and whether it lost money.

MacFarlane, the San Francisco-based investment firm, resigned from its work on behalf of the nation’s largest pension fund, the California Public Employees’ Retirement System, in October 2009. MacFarlane co-managed the fund’s $900 million investment in LandSource Communities Development LLC, a housing venture that declared bankruptcy in 2008.

Football Plan

Anschutz’s firm, AEG Worldwide, has asked the Los Angeles City Council to approve a plan to build a $1.4 billion football stadium and convention-center expansion that involves the city issuing $350 million in municipal bonds for the convention- center portion of the project. Part of the existing center would be torn down.

AEG seeks to attract at least one National Football League team to the city, which lost the Raiders after the 1994 season. Revenue from the stadium and convention center addition, along with assurances from AEG, will be enough to repay the bonds, according to Michael Roth, a spokesman for the company.

“We stand by our commitment that this project will not cost the taxpayers or the city’s general fund any money,” Roth said in a June 20 e-mail. He had no comment yesterday on the MacFarlane transaction.

A committee of five city council members has been holding hearings on the AEG proposal, the next of which is scheduled for June 30. AEG has given the city a July 31 deadline to decide on its plan.

--With assistance from Nadja Brandt in Los Angeles. Editors: Anthony Palazzo, Daniel Taub

To contact the reporters on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Mark Tannenbaum at mtannen@bloomberg.net


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