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Friday, July 12, 1996
VRS trustees to hear of possible deal
RF&P partnership with D.C. firm may be in offing
BY JEFF E. SCHAPIRO
Times-Dispatch Staff Writer
The trustees of the Virginia Retirement System will be briefed in secret today on a potential partnership with Charles E. Smith Co., a Washington real estate giant, for the pension fund's controversial RF&P Corp.
"We are having a meeting — and it is a significant meeting," trustee Edwin T. Burton III, head of a special VRS committee overseeing the possible sale of RF&P, said yesterday.
The session could prove to be a turning point in VRS' continuing and complex relationship with RF&P because the trustees could authorize their negotiators to attempt to close a deal for the $548 million firm.
Among the terms being discussed: rather than sell RF&P outright — as once preferred by several trustees — the retirement system could split control of the company, acquired by VRS in 1992, with Smith.
That would free VRS of managerial responsibility for RF&P, while ensuring a regular cash dividend to the pension fund. Profits have been kept by RF&P rather than surrendered to VRS for other investments.
Smith and RF&P are partners in Crystal City, the sprawling office-residential complex in Northern Virginia built atop RF&P land. Office tenants include the Navy and other giant federal agencies.
Bought over the objections from senior legislators and some VRS trustees, the acquisition of RF&P led to a federal criminal investigation and forced reforms to increase the retirement fund's accountability.
Erwin H. Will Jr., VRS investment director, declined to discuss a possible breakthrough with Smith, which hopes to fend off SFRE Inc., an Alexandria property firm, and others for control of RF&P.
"You write me a check for $548 million, and it's yours," said Will.
James C. Wheat III, VRS chairman, said he was "not prepared to comment" on negotiations for RF&P, positioned for possible sale after the fund received several unsolicited offers in April 1995.
Meanwhile, SFRE — in a letter to Wheat yesterday — complained that its offer for RF&P had not been fully considered by VRS and its investment advisers, Lehman Brothers.
"The magnitude of this transaction, and the capacity of our investor group, deserve more professionalism and attention than has been offered since our initial expression of interest in April of 1995," SFRE said.
© 1996, Richmond Newspapers Inc.