Microsoft co-founder's
holdings akin to 'a major corporation'
Oct 18, 2018 @ 1:57 pm
By Bloomberg News
Paul Allen's family office will live long and
prosper.
The billionaire's vast holdings at Vulcan Inc.
-- with real estate, art, sports teams and venture capital stakes -- would take
years to unravel, if that's even what he wanted. Mr. Allen, who died Monday,
had no spouse or children to divide his empire among. But there are many others
with interests at stake, including family, staff and charities, as well as
potential investors eager to snap up pieces.
"Even though this is a person's life and
their personal holdings, it's almost like the dissolution of a major
corporation," said Darren Wallace, an attorney for Day Pitney, who handles
estate affairs for high-net-worth clients. "Even if things go along as you
might expect, it could easily be three to five years."
The Microsoft Corp. co-founder spent more than
three decades outside the software company, amassing a variety of business and
philanthropic endeavors. At least half his $26 billion fortune is probably
earmarked for charitable purposes after he joined the Giving Pledge almost a
decade ago, and an estate tax bill will apply on much of what remains. But
important questions loom about which of his assets are likely to be liquidated.
Vulcan, the 32-year-old company that oversees
Mr. Allen's money, was the umbrella for a variety of investments, activism and
philanthropic units. It includes Vulcan Real Estate, a commercial portfolio
that Bloomberg estimates is worth $1.5 billion, and Vulcan Capital, which tends
investments in public and private companies. He also amassed one of the world's
greatest art collections and held ownership stakes in two professional sports
teams worth roughly $3 billion.
His philanthropic interests were split among
several other units. The Paul G. Allen Family Foundation, started by Paul and
his sister Jody, oversaw assets valued at $766 million at the end of 2016,
according to the latest filing available. That private organization is distinct
from the Allen Institute, a public charity that focuses on medical research,
with Jody and several Vulcan employees serving as directors.
Lori Mason Curran, Vulcan Inc.'s director of
real estate investment strategy, said no changes are imminent for Mr. Allen's
network of interests, including the investment firm.
"Paul thoughtfully addressed how the many
institutions he founded and supported could continue after he was no longer
able to lead them," she said in an emailed statement, without elaborating.
"Now, is the time to focus on Paul's life and allow his family and friends
space to grieve. We will continue to work on furthering Paul's mission and the
projects he entrusted to us."
If other large estates are any guide, the
legal transfer of his holdings will probably take years. Federal estate tax
returns for deceased taxpayers must be filed within nine months, though many
filers ask for a six-month extension. A large and complex estate like Mr.
Allen's -- even when well-prepared for a succession -- is likely to face an
Internal Revenue Service audit, if only because of its size and complexity,
said Mr. Wallace. During that time, administrative staffers are often required
to deal with the agency's questions.
"There are no changes imminent for
Vulcan, the teams, the research institutes or museums," Vulcan chief
executive officer Bill Hilf said Monday at a press conference in Seattle.
"There's a clear plan of what he wants done for his legacy."
Mr. Allen's death has already fueled
speculation among professionals in Seattle's real estate market about whether
there might be opportunities for buyers to take over some of his properties and
projects.
The company has buildings under way for
Facebook Inc. and Alphabet Inc.'s Google, as well as a series of apartment
complexes overlooking downtown Seattle. It has also amassed land in nearby
Bellevue, fueling speculation that it could be developing a site for a major
corporate tenant.
Mr. Allen leaned on plenty of people to run
the operations. Ada Healey has led Vulcan Real Estate for nearly two decades
and was responsible for executing Mr. Allen's plan to transform Seattle's South
Lake Union neighborhood from an out-of-favor industrial area into a thriving
tech hub for Amazon.com and other companies.
"Ada is really, really good at what she
does, and the people around her [are] really good at what they do," said
Tom Craig, a partner at DSC Capital, a commercial mortgage banking company in
Seattle.
Vulcan Inc. owned companies and other entities
that may not be easy to liquidate or transfer to a charitable vehicle. Far
beyond real estate, for example, Mr. Allen founded Stratolaunch Systems, which
has been developing the world's largest plane to launch smaller vehicles into
space.
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