Rep. Pittenger’s former company seeks to shift management to Charlotte firm

U.S. Rep. Robert Pittenger’s former real estate company is asking its investors to approve a sale to a Charlotte-based firm that owns property around the Southeast.

The deal with South Street Partners, disclosed in a letter sent to investors late Thursday, would apparently remove the Pittenger family from the management of the company and the 52 properties it oversees. A stake that Pittenger Land Investments holds in each property would be transferred to South Street, although personal investments made by Pittenger family members would be retained.

In recent months, PLI has come under fire from some investors for the slow pace of land sales, mark-ups charged on properties and a lack of transparency around its operations. The FBI and IRS have also been investigating the Charlotte Republican’s role at the firm he founded three decades ago.

South Street needs a majority of investors in each property to approve the sale, but some say they are skeptical of the deal, despite their concerns with current management. Investors are to submit their votes by Nov. 25.

PLI identifies raw tracts in potential growth areas and gathers investors to buy the properties, which are held by limited liability companies. The goal over time has been to make a return by selling the properties to developers. As manager, PLI also collects annual fees from investors for property taxes and other expenses.

After he was elected to Congress, Pittenger transferred the company to his wife, Suzanne, to meet House ethics rules. PLI attempted to shift management to another company this summer but called off the deal after investor complaints. The Observer previously reported that the company was in talks with South Street.

Robert Pittenger confirmed in August that his former company was under investigation but has repeatedly denied any wrongdoing. The FBI and IRS are looking into personal loans and contributions Pittenger made to his 2012 congressional campaign and whether Pittenger improperly transferred the money from PLI.

The Observer reported Thursday that the FBI and IRS have conducted additional interviews in recent weeks, a sign that an investigation that began this spring continues. Separately, Pittenger on Thursday asked the bipartisan House Ethics Committee to conduct a probe of his role at PLI, saying he wanted to confirm his compliance with House rules.

South Street, founded in 2009, is best known for buying the company that developed South Carolina’s Kiawah Island in 2013. The firm reached out to Suzanne Pittenger in August after news of the FBI investigation surfaced.

Under the proposed deal, the 10 percent stake that PLI holds in most of the LLCs would be conveyed to a new subsidiary of South Street, which PLI said would align the acquiring firm’s interests with those of investors. The compensation PLI would receive for this interest was not disclosed.

South Street said it plans to make some changes that could be more attractive to investors. For example, the firm plans to charge an annual management fee for each LLC that it estimates would be 10 percent lower than what PLI has been assessing. It also pledges to provide investors with annual financial statements.

David Woltz, an investor who has started a blog critical of PLI, questioned whether the Pittenger family would really separate itself from management of the company. He also said the company needs to fully disclose investor vote tallies.

A committee of up to 20 mostly Charlotte investors is urging a “No” vote on the proposal, said a representative who declined to disclose his name until the group has prepared a public statement. Although the group favors a change in management, PLI should retain at least some interest in the properties until investigations involving the company are completed, the investor said. Otherwise, PLI would make money on the deal before investors make a return and any questions about the companies’ operations are resolved.

Suzanne Pittenger did not respond to a request for comment on Friday. South Street said it couldn’t immediately comment.

This story was originally published November 13, 2015 at 3:40 PM with the headline "Rep. Pittenger’s former company seeks to shift management to Charlotte firm."