From U.S. Rep Robert Pittenger, in response to “Investors question Pittenger markups” (Aug 23):
My former company, Pittenger Land Investments, has had a sterling track record for 25 years. Sunday’s story about PLI was not clear on important issues for understanding its business model. Here are the salient points for clarification:
1. Assessment markups are common and a norm in the investment banking business (called transaction fees) and other financial investments to offset due diligence, market analysis, fees paid to marketing representatives and financial advisors, consultants, etc. The typical PLI assessment markup was 10-20 percent, with all properties offered to prospective members at below market comparables.
The valid question to the potential member is: Is the offering price a good opportunity? We don’t ask the retailer, the attorney, the accountant, the plumber, or the physician the cost of doing business and to justify it. If they don’t believe a certain product or service is a good value and don’t see opportunity and benefit, they do something else.
2. There was full disclosure that there was an assessment markup, which is clearly conveyed in every investment summary over the last 25 years, and provided to each prospective partner. The Observer article quoted two people who had apparently not read the investment summary, while it did not quote others who were interviewed that did understand the assessment-mark-up provision.
3. Our family has significant personal investments in most of the properties, including three family members investing in the property referred to by the Observer.
4. Yes, the housing market has been slow from the recession, with only 9,500 new home starts last year compared to 20,000 new home starts in 2007. However, the land owned by the partners is still there, with no debt, and it will ultimately be in demand.
5. Pittenger Land Investments provided excellent returns for over 15 years prior to the recession (average 18 percent compounded rate) and the remaining parcels should each have positive outcomes.
I have endeavored to always act in integrity and transparency in my business and political efforts and will continue to do so.