Abandoned Hospital
Old Parkland was built on the site of the original Parkland Hospital, which opened in 1894. A new hospital had already been built by the time John F. Kennedy was assassinated during a Dallas motorcade in 1963, and Old Parkland had been converted into a treatment center for tuberculosis and psychiatric patients. The building eventually fell into disrepair, was covered with graffiti and became a blight on a gentrifying neighborhood five minutes from Dallas’s downtown and the same distance from its priciest neighborhood, Highland Park, where Crow lives.
Today, Old Parkland charges among the highest office rents in Dallas. It has a restaurant, a barbershop, a gym and a circular underground debate hall. A statue of Alexis de Tocqueville overlooks a central courtyard, and Crow said he plans to install a painting of George W. Bush standing in the wreckage of the World Trade Center towers.
“There’s a feeling of university campus more than an office building,” said Ben Weinstein, a managing director at Korenvaes Management, the family office for the founder of hedge fund HBK Investments. He used the campus network to raise money to fund the purchase of Super Chix, a fried-chicken sandwich restaurant concept, from Yum! Brands Inc. in August. “It’s nice to be part of a network that shares.”
When Crow took over from his father, the business was in dire straits. Not only had the firm purchased real estate projects and hotel properties on credit, it had lent to the developers it brought on as partners, according to Anne Raymond, then an accountant at the company and now No. 2 at Crow Holdings.
Forced Sellers
Harlan Crow began dismantling the empire. Two real estate investment trusts were spun out in 1993 and 1994, and Wyndham had an initial public offering in 1996. The real estate brokerage went public in 1997 and was later bought by CB Richard Ellis Inc.
Cowed by the experience of the 1990s, Crow and his executives decided they “never wanted to be forced sellers again,” said Mike Silverman, who has helped manage the family’s non-real estate investments since 1998. At the time, about 80 percent of the family’s money was invested in real estate; today it’s less than 40 percent, he said.
Crow Holdings still has two real estate development companies: Crow Holdings Industrial, a warehouse and manufacturing developer it started in 2013; and Trammell Crow Residential, a multifamily residential property developer begun in 1977.
In the wake of the financial crisis, the residential unit spun off some assets into an investment trust, Mill Creek Residential Trust LLC, to raise cash for the remaining business. This time, the family’s money was insulated, said Kenneth Valach, Trammell Crow Residential’s CEO.
The real estate arm began soliciting pensions and foundations to make investments alongside the family. The pitch worked: Crow Holdings raised $281 million for its first fund in 1998. It’s now raising a seventh, seeking $1 billion to $1.5 billion, according to a document published on the website of the State Universities Retirement System of Illinois. The first five funds have generated net internal rates of return -- a performance measure used in private equity -- of from 0.2 percent for a 2006 fund to 29 percent, the document showed.
‘Nothing’s Permanent’
By the end of the last decade, Crow Holdings had morphed into an investment firm that happened to be an owner of a real estate developer, rather than a real estate developer that happened to have investments. When it was forced by the Dodd- Frank Act of 2010 to register the real estate fund business as an investment adviser, it decided it might also try its hand at investing other families’ money.
Silverman and partner Kirk Rimer, formerly of Goldman Sachs Group Inc., pitched wealthy U.S. families, shooting for returns of inflation plus 5 percent and promising to keep money liquid during downturns. Including the Crow family, which pays the same management fees as external clients, the business now oversees almost $2 billion for 28 families.
Crow started looking for a successor last year but hasn’t found one yet. He has three children, all under 21. He said he doesn’t want to make the future success of the company dependent on family management. He also doesn’t plan to sell anything.
“The notion that we’d build something and sell it is antithetical to my dream of having something that’s -- I’m tempted to say, ‘to having something that’s permanent,’” Crow said. “But whenever my brain goes to the word ‘permanent,’ I think that is blasphemous. Nothing’s permanent, right?”