Harvard-controlled LLC in $120+ million deal with anonymous LLC connected with Canadian pension fund.

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Wine Industry Insight | 14 August 2020

Harvard-controlled LLC in $120+ million deal with anonymous LLC connected with Canadian pension fund.
 

Two Harvard-controlled LLCs have deeded over 7,104.74 acres of land in northern San Luis Obispo County for an estimated $120.14 million (based upon $132,159 paid in county real estate transfer taxes.) It is unclear whether this was an actual sale or a method for the Harvard LLCs to pull cash out of the assets.

 

Note: We are still looking for a more recent form 990 filed by Phemus Corporation which is the primary non-profit entity that manages close to 300 entities for the Harvard Management Company, Inc.

 

The transfers were made three minutes apart, late morning on June 26, to Kylix Vineyards California LP, an anonymous New York City “drop box” partnership owned by Kylix Vineyards GP LLC, an equally anonymous Delaware Corporation.

 

According to the deeds, Kylix Vineyards California LP receives its tax statements care of a huge public Canadian pension fund, Public Sector Pension Investment Board (PSP) which has its main business office in Montreal. Its most recent annual report is here.

 

In addition, PSP is registered with the U.S. Securities and Exchange Commission. A search of its filings for Kylix did not return any results. However, the San Luis Obispo transactions may be to recent to have been included in periodic documents.

 

According to the Brodiaea Kylix-Deed, the transferred land included 32 parcels owned by Brodiaea, Inc., totaling 5,167.34 acres located south of Shandon in the San Juan Valley.

 

In the San Juan Road Kylix-Deed, 1937.4 acres in 14 parcels was transferred to Kylix by San Juan Road LLC. In that deed, 10 small parcels are located located along Highway 46, southeast of the Paso Robles airport and the reset roughly south of the Brodiaea parcels in the San Juan Valley.

Sale? Or not?

The exact nature of the transaction is unknown. According to records from the San Luis Obispo Clerk-Recorder, the deeds were recorded as “Grant, Joint Tenancy, Quit.”

 

A Grant deed is the most familiar form, conferring all rights to the real estate and offering outright ownership. Joint Tenancy is exactly what it says: outright ownership of and undivided interest in the real estate to more than one party.

 

Quit deed is far more equivocal, offers limited buyer protection and is frequently accompanied by private written agreements between or among the parties.

 

Speculation

 

Wine Industry Insight has reached out to Matt Turrentine who holds LLC roles with Brodiaea and San Juan Road and to PSP.  Responses, if received, will be added here.

 

WII also communicated with a wide variety of sources. None even remotely connected with the relevant entities responded.  Other knowledgeable sources offered a variety of speculation, none of which has been confirmed.

 

Top speculations included:

 

California has too many acres of wine grapevines. Vineyard authorities liker Allied Grape Growers are recommending a continued ripping out of vine to avoid another glut.
 
Given pandemic, the COVID recession, and financial issues with colleges, Harvard decided to pull cash from the assets without actually selling them.
 
The structure of the deed and the grantee association seems like there may be some other arrangement Kylix. This is because the Public Sector Pension Investment Board isnt an operating institution, but one that holds and receives income. That raises the question of who is going to do the actual farming? Same contractors as now?
 
 
WII’s contacts in Toronto and Montreal allege that these transactions are an arrangement masterminded by PSP board member Léon Courville to park” the real estate with PSP under an agreement where Harvard’s main operating non-profit entity, Phemus receives a lump sum and PSP receives income from the operation of the real estate assets. 
Original source: WII
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