By Chris Helman and Lauren Debter
Beto and wife Amy at a campaign even in Austin this year.
Last week the New York Times published a story about Congressman Robert Francis "Beto" O’Rourke of Texas, focusing on how a decade ago he supported a plan backed by his real estate tycoon father-in-law William Sanders to redevelop a blighted El Paso barrio neighborhood. The gist of it: O’Rourke, a city council member at the time, didn’t object when the mayor of El Paso threatened property owners with having their properties seized under eminent domain and sold to a real estate investment trust started by Sanders.
The Times story referred to O’Rourke’s dad-in-law, Sanders, 77, as a "billionaire," but didn’t venture a more precise estimate of his net worth. A couple days later another story, on the Spectator site, asked why nobody mentioned Beto’s wife Amy was a “billionaire heiress.” It cited the Times story and ventured Sanders’ fortune at $20 billion. Puh-lease.
For those of you living under a rock, Beto O'Rourke is the El Paso Democrat challenging Republican firebrand Ted Cruz for senator this year. His father-in-law, Bill Sanders, is a bona fide real estate tycoon known as the godfather of the Real Estate Investment Trust, or REIT. Sanders has made a pile; he sold one of his many companies, called Security Capital, to General Electric for $5.4 billion in 2002.
Nice start, but here at Forbes we're sensitive to people tossing around the "billionaire" label without the goods to back it up. Based on a review of Sanders' biggest deals, we're far from ready to put him on our list of The World's Billionaires.
Sanders grew up in El Paso; in 1966 he founded International Development Corp, which in 1968 he moved to Chicago and renamed LaSalle Partners. It later became real estate brokerage giant Jones Lang LaSalle. In the late 1980s Sanders reportedly sold his stake for $65 million.
In 1991 he founded Security Capital Group in Sante Fe. It became a REIT incubator of sorts and went public in 1997, growing to $26 billion in assets by 2000. In 2001 Security Capital made $265 million selling shares of operating company CarrAmerica; sold affiliate Homestead Village to Blackstone for $740 million; and sold at least $380 million worth of stock in Archstone Communities. Security Capital also gave rise to industrial real estate giant Prologis. In 2002 Sanders sold SCG to G.E. Capital for $4 billion in cash plus assumption of about $1.4 billion in debt. According to SEC documents, Sanders made about $250 million cash in the deal.
As an encore, Sanders created a new industrial REIT, Verde Realty, which invested in properties on either side of the border, catering to the maquiladoras. In 2012 Brookfield Asset Management and Ross Perot Jr.’s Hillwood bought 81% of Verde for $886 million, including assumed debt. According to SEC documents, Sanders owned 6.4% of Verde equity, good for about $22 million.
The El Paso controversy came in 2007 when Sanders and a group of El Paso/Juarez businesspeople known as Paso del Norte, and including oil refining billionaire Paul Foster, hatched a plan to redevelop a couple hundred acres of blighted buildings between I-10 and the border, in an area known as Segundo Barrio. Sanders, backed by dozens of other investors, created a REIT called Borderplex Community Trust to buy up those buildings that the city was set to condemn and bulldoze.
According to an excellent 2007 report in the Texas Observer:
Once the El Paso plan was unveiled, Sanders made it clear that a muscular implementation program would be followed. Property owners, he told reporters, would have the choice of exchanging their properties for shares in the REIT, selling at fair-market value, or facing condemnation by the city. “Unfortunately, it may happen that at some point, we’ve got to say, ‘Sorry we weren’t able to work something out,’” he said. Then he added that city officials would have to “begin the process of taking your property at fair-market value.”
O’Rourke, a dues-paying member of Paso del Norte, was a city council member at the time. He abstained from some votes so as not to be too obvious in support of his father-in-law’s project. The plan ultimately failed, and the Borderplex Realty Trust floundered amid lawsuits. But the REIT did raise at least $30 million, and bought the 18-story Chase Tower in downtown El Paso, which housed the HQ of Sanders’ Verde Realty. New Mexico businessman Dan Burrell invested $8.5 million with Borderplex before pulling his support and alleging “multiple fraudulent misrepresentations,” according to court docs. In 2017 his case was dismissed.
In the end, no Segundo Barrio properties ended up getting seized by El Paso. In 2009 Texas voters passed an amendment which reformed eminent domain laws by prohibiting government from seizing land for non-public use. Mother Jones magazine refers to the the El Paso eminent domain dustup as "the political fight that launched Beto O'Rourke's career." Not a very auspicious start. Beto himself has subsequently spoken out against the federal government using eminent domain laws to build a border wall. “That wall will not be built on the international border between the United States and Mexico,” he reportedly said. “It’ll be built on someone’s farm, someone’s ranch, someone’s property, someone’s homestead.”
The candidate has also spoken out against business people getting in bed with politicians. The “system is rigged,” he reportedly told a crowd in El Paso, “I can tell you that access is purchased, that votes are bought and paid for, that outcomes are determined before you have a chance to call your member of Congress or senator.”’
Sanders is still in business. A couple years ago he merged a bank that he owned about a third of into FirstSun Capital Bancorp, which has about $400 million in shareholder equity. It was run for a time by his son William "Pablo" Sanders. It's unclear whether they're still involved; the person answering the phone at the 201 East Main Street office of the bank said William Sanders hadn't worked there for a year or more. An operator had no listing of any Sanders at FirstSun Capital Bancorp or its Sunflower Bank division. Attempts to reach them and the O'Rourke campaign for comment have so far been unsuccessful. Beto O'Rourke disclosed a net worth of roughly $5 million to $10 million (he's richer than Ted Cruz).
As for Sanders —it's unlikely, though possible, that he's a billionaire. Without more info in his deals, we can’t know how well Sanders has managed the proceeds from his paydays, how much personal debt he’s taken on, or what he’s really worth. Based on the public information that Forbes has reviewed, Beto O’Rouke’s “billionaire” father-in-law is more likely to have a net worth in the neighborhood of $500 million.