Bass’s vision presumes that ESG mandates are here to stay, said Charles Gilliland, an economist at the Real Estate Center at Texas A&M. Yet the idea, in both principle and practice, is becoming increasingly politicized. Texas itself has been at the fore of the backlash, threatening to blacklist asset managers that divest from fossil fuels.
Bass made his name with aggressive bets on a grandiose scale, shaped through dogged and sometimes controversial research. His wager against subprime mortgages in 2008 netted him a fortune and instant credibility, attracting a torrent of money to his fund, Hayman Capital, and an invitation to testify in front of Congress as an expert witness.
He then turned his sights on China, by shorting the yuan, and the European Union, by betting its sovereign debt would collapse. Neither prediction panned out. A crusade to challenge pharmaceutical patents that he said led to higher drug prices largely flopped. In the five years through 2019, Hayman’s assets shrunk by more than 80%.
Logical Extension
Despite the global bent of Bass’s previous interests, he insists his new venture is a logical extension of the skills he honed on Wall Street.
“Farm and ranch purchasing is not as efficient a market as buying a share of Microsoft,” he said. “It doesn’t have the millions or the hundreds of millions of eyes and analysis being done on it. The number of analysts looking at things like this you could probably put on one hand.”
He cited the Chocolate Bay Conservation Parcel, which CEM acquired in June for an undisclosed price, as an example. Located on the Gulf Coast just west of Galveston, the 5,403-acre tract is a mixture of upland and wetland habitat that serves as a refuge for the endangered black rail bird and an ecological bridge between the 4,714-acre Chocolate Bay Preserve to the east and the 44,413-acre Brazoria National Wildlife Refuge to the west.
In a peculiar twist, one of the principal assets of the Chocolate Bay parcel is actually man-made: four natural-gas wells. Each is a candidate to be a carbon capture and storage facility, a process in which carbon dioxide emissions are injected into deep rock formations to reduce CO2 emissions into the atmosphere. Bass said projections show each well could sequester as much as 2 million tons of carbon a year for up to 15 years, all without altering the landscape’s aesthetics.
The parcel, never listed for sale, was scouted by Bass’s partner at CEM, Terry Anderson. A trained forester specializing in wildlife management and owner of seven ranches, he’s spent the last three decades working with landowners, regulators and investors on conservation or wetland mitigation projects. Most of CEM’s acquisitions have been off-market, and transpired because of personal connections by Anderson and others at the firm.
“If you were a Connecticut firm, you would have never been able to buy this piece of property,” Bass said. “A group of Harvard guys with a billion dollars couldn’t do it.”
This article was provided by Bloomberg News.