Thursday, May 7, 2015

Taking Stock in State Street Skyscraper

It will help relieve the stre$$:

"Want to buy into a high-rise? Here’s your chance" by Jay Fitzgerald Globe Correspondent  April 29, 2015

When is a skyscraper more than just a building? When it becomes a publicly traded company.

That could actually become the case at State Street Financial Center in downtown Boston, which is the sole asset of a business that filed documents with regulators this week to launch an initial public stock offering.

It’s not at all uncommon for a major real estate owner to bundle together office buildings, hotels, or other properties to create a real estate investment trust — and then hold an initial public offering, with share prices based on the underlying value of the assets.

But an IPO for just one building?

The plan to turn State Street Corp.’s headquarters at 1 Lincoln St. into a public company is extremely rare in the real estate industry and has left many experts scratching their heads.

Among their concerns: Is just one property enough to support a public company and ultimately protect its investors?

“It’s certainly a very different concept,” said Greg Vasil, chief executive of the Greater Boston Real Estate Board, noting that he had never heard of such a transaction in Boston.

“What happens to the value of the investment in a down market? Why shouldn’t investors just invest in the stock market in general, rather than one building?” he said.

It’s also puzzling to Todd Lukasik, a senior analyst at Morningstar Inc. who specializes in REITs.

“It definitely seems a little bit unusual,” he said. “If you have only one building in one market and that market goes south, what do you do? The company’s not diversified.”

But all that investment money will have been poured in and stolen, 'er, lost.

Undaunted by such concerns, a venture led by Fortis Property Group of New York, which bought the 1.1-million-square-foot tower for just under $900 million in 2006, would sell a 48.88 percent interest in the building through a real estate investment trust called ETRE REIT, according to documents that were filed with the Securities and Exchange Commission.

It's a Green Mon$ter of tax cut!

In the documents, ETRE said the State Street tower, built in 2003 and fully occupied by State Street Corp., is currently valued at $1.1 billion.

The move to hold a public stock offering for the building is the idea of ETRE Financial LLC, founded three years ago with the purpose of “facilitating the public listing of individual real estate assets to improve access, liquidity, and transparency in commercial real estate,” according to its website.

A spokesman for ETRE Financial and Fortis Property declined to comment.

This is not the first time that ETRE Financial has tried to take a building public. Less than a year ago, it registered IPO documents for a 12-story building with office and retail space in Washington. The offering was later withdrawn.

Now, ETRE is trying again in Boston. No share values have been set yet for the offering, which is typical in the kind of preliminary documents that were filed Tuesday.

Jonathan Morris, a former executive at Boston Properties Inc., itself a publicly traded real estate investment trust, said that he was fascinated by the concept of taking only one building public. Such a move could allow small, individual investors to profit from ownership in a building.

“I don’t think it’s a bad idea, depending on the terms of the deal,” said Morris, an adjunct professor who teaches about REITs at Georgetown University. But Morris said he would wait for more detailed information before forming an opinion about the Boston offering.

“It’s all about the details,” he said.



"Federal and state banking regulators have ordered State Street Corp. to improve its compliance systems after they found deficiencies in its internal controls. State Street’s board of directors has 60 days to submit a plan to strengthen oversight of companywide compliance risk management. Among other things, the report must address “personnel, systems, and other resources as are needed to operate a compliance risk management program that is commensurate with the compliance risk profile of the organization and that fully addresses the organization’s compliance risks on a timely and effective basis.’’ An agreement with the Federal Reserve Bank and the Massachusetts Division of Banks is meant to ensure Boston-based State Street follows anti-money laundering regulations and the Bank Secrecy Act. State Street owns State Street Bank and Trust Co. but does little standard banking; it mostly handles investments and record keeping for pension funds and large investment accounts."

Too big to jail, even in a tower.

UPDATE: State Street Bank to create 1,000 jobs for inner-city youth; Five nonprofits will get $20m from State Street

Hey, who cares if the money came from organized crime and will simply "provide new ways for corporations and individuals to influence (as if they didn't have enough already)" and push the agenda.

"State Street may face SEC lawsuit; Tactics to win pension business are at issue" by Beth Healy Globe Staff  June 18, 2015

State Street Corp. said Thursday that federal securities regulators may bring a civil enforcement action against the Boston financial services company over its use of consultants and lobbyists to win pension business during a period that ended in 2011.

That's a fancy term for kickback.

In a so-called Wells notice, the Securities and Exchange Commission disclosed to State Street that the agency will probably allege that the company violated securities laws.

The company said the investigation is focused on State Street’s dealings with public pensions in two states. State Street said the probe included, “in at least one instance,” political contributions by one of its consultants during and after a public bidding process.

State Street had disclosed in November that the SEC was investigating its solicitation of public retirement plans in Ohio.

Carolyn Cichon, a spokeswoman for State Street, declined to say which other state is involved in the investigation.

“We’ve cooperated with the SEC regarding their request for information about how we have solicited business from public retirement funds,’’ Cichon said in a statement.

“Over the past several years, we have enhanced our compliance training and oversight for our employees in the US public plans sector.”


State Street said that since 2012 it has stopped hiring lobbyists and consultants in its sales efforts with US public retirement plans. In addition, the head of the US public fund team at State Street was fired, Cichon said.

The Wells notice informed State Street that the SEC may file civil charges. State Street now has a chance to respond to the commission’s allegations, and the company said that it intends to do so....


Hey, they only ripped off retirees in Ohio to give you that job being a $lave to the $y$tem.


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