The Mormon Church’s Real Estate Empire

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1:52About 20 minutes south of Denver International Airport, there's a chunk of land bigger than Manhattan Central Park. They're planning for it to house more than 12 ,000 people, have a school and a fire station. It's almost 1 ,000 acres, slated to become a new neighborhood called Tributary. The tributary is mainly still raw land. When we stumbled upon this, there wasn't really anything written about it. We spoke to people and nobody really knew too much about it. The developer behind the property is called Property Reserve, Inc. It's not a company that people might immediately recognize. But the name behind Property Reserve is much more known, and it's actually the Church of Jesus Christ of Latter-day Saints, which has quietly held the land for many decades now.

2:39Also known as the Mormon Church. It bought this land in Aurora, Colorado back in the 1980s. And now, with the help of its real estate development arm, it's turning it into a master plan community. So we sought out to answer the question, you know, why is the church investing in such a big project in Aurora, Colorado? And what do they plan on doing with the site? And it's not just home building. They're setting out to build entire communities across Florida, across Arizona, maybe even in Texas. this. It's not exactly a secret that over the past century, the Mormon church has acquired a lot of land around the U.S.

3:17But what hasn't been clear is how much land the church has, where, and what it's doing with it. As far as we can tell, the church owns about 2.4 million acres, the size of about three Rhode Islands. And if you were to compare their size to other private landholders, it puts the church into one of the largest, if not the largest, landowner in the state. To our estimate, it's worth upwards of$20 billion.

3:51I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, the Mormon church is now a major real estate developer with a unique investment strategy. Bloomberg commercial real estate reporter Natalie Wong and data reporter Ann Choi on how the LDS footprint has expanded and where the church is planning to build next.

4:15So Natalie, when and why did the Mormon church get into the real estate business? So real estate has played a role for a long time in the church. I mean, even its founder, Joseph Smith, had always envisioned self-sufficient communities that are built around these types of temples and agriculture. And then you finally had their followers settle in Utah. Owning land and property had become sort of intertwined with the church's emphasis on preparing for the future, building up that reserve to be, you know, financially stable. For much of its early history going into, you know, the Great Depression, going into the war, the church actually experienced a lot of financial strain.

4:56They took on a lot of debt, and they really were not able to keep up with their expenses. And so by the end of the 1950s, they actually recruited a very successful businessman to join their leadership. And he played a really pivotal role in structuring what is now today a very self-sufficient, responsible investment unit of the church as a way to build these permanent capital reserves. There was another pivot moment for the Mormon Church's real estate investment strategy in 2017 when Ashley Powell took over Property Reserve, which is the church's real estate investment arm. Who is Ashley Powell?

5:32What is his background and how does he kind of shake things up? Powell is a commercial real estate veteran. He had spent many years working in the commercial real estate investment arms of Deutsche Bank, Bentle Kennedy. And these are firms that have deployed billions into real estate. And we've seen that when Powell came and took over leadership at Property Reserve in 2017, he really amped up the types of investments they have globally. I associated the church and their real estate holdings with their land, with their farmland and their ranch land and their temple sites. What we've really seen over the past decade is an increase in different types of investments that are more traditional in commercial real estate, more higher yielding.

6:14We've seen them invest in luxury apartments. We've seen them invest in hotels. We've seen them invest in warehouse portfolios across the country. What was really interesting about the tributary is that we're noticing that they are starting to turn raw land, farmland that they've owned for decades now, into master-planned housing developments. And how do we know what we know about the size of the Mormon church's holdings? Tell us about the data reporting you did to come to this number. Through Natalie's reporting, we identified key subsidiaries of the church. We did additional reporting to find out what other entities they used to purchase land.

6:57So we provided multiple addresses, multiple names of the entities or key members behind the entities to a third-party data provider. And we asked, can you scour your database to give us a sense of most comprehensive look at their current land ownership? They scour thousands of counties, tax records office. They track down sales transaction data. And this is really the hard part because some states like Texas, they're not required to disclose the sales price at the time of transaction. So really, the$20 billion figure is an underestimation. What don't we know about these holdings? What could be left out here?

7:39We do not have the comprehensive list of the subsidiaries of the church. We do not know the true value of the price that they paid for different lands, just like this tributary project. When they bought it in the 1980s, they bought it at a discount. Now, the value of that land after being developed, housing 10 ,000 people, that value is going to increase many folds. Yeah, and for example, like there's Sunbridge land in Florida. Sunbridge is this new housing master plan development that they started doing in 2014. I'm sure when they bought that land decades ago as part of their overall deseret ranch land, it was worth much less.

8:19And now there's luxury housing on it. They're building industrial portfolios, offices. That value has likely soared. How does the centrality of real estate investment and the amount of money that the Mormon church is making on real estate development compare to other churches' real estate approaches? There's a big difference because when it comes to the Mormon church, it is extremely centralized. Everything is sort of run from Utah, whether it's investments in the UK or investments in New York or investments in Colorado. With the Catholic church, it's different. Different dioceses in different cities own their own properties, and it's not really run by the Vatican Church.

9:03So if we were to try to estimate how much the Catholic Church owned in its entirety, it would be a completely different project. Coming up, we dig into the way the Mormon Church makes its purchases, how it approaches its investments, and the consequences of the limited transparency we have into its holdings. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version.

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12:13I want to talk more about the investment approach that the Mormon Church takes because it's really different from the one we see from, say, wealthy individual real estate investors or even some of the other developers that you cover, Natalie. How does the Mormon Church pay for these purchases? So what we've heard from our sources is that the Mormon Church likes to pay in all cash. They don't like to take on debt, and that ties back to their faith. They don't like to take on leverage. So they think with a very long-term view. So the types of investors that I cover, for example, you know, let's just say they look at an office building.

12:48They look at leases that span 15 years. You know, they might look at selling in 10 to 20 years. The Mormon church looks in a generational perspective, 50 to 100 years. So some of these master plan housing developments that they're plotting will take place over multiple decades. And no debt, all cash offers. How much of an outlier is that in the real estate industry? Most real estate players really love to use leverage. It's a very attractive way to make these deals work. We've seen that they are able to outbid certain investors, especially in the post-pandemic age where we have seen commercial real estate suffer.

13:26the Mormon church is able to come in with all cash. They can close much quicker than other folks who may find it a little bit harder to get lenders for certain deals because borrowing costs are so much higher than they were pre-pandemic. People that we have spoken to say that the Mormons mean what they say and they do what they say. So if they shake hands with you, the deal will get done. If it's something that they believe in, even if it's slightly above what the market thinks it is at this moment, they're willing to make that bet. Example of that, in 2021, their land division outbid Bill Gates' firm to buy a bankrupt portfolio of Washington Farms that's nearly the size of Manhattan for almost$210 million.

14:04This May alone, they acquired a luxury apartment complex in Boca Raton, and we found out that that's one of the priciest commercial real estate deals in that area this year. And where do they get all this cash? Is this coming from some of the tithes that are made by the church's members? Yes, members are expected to tie 10 % of their income. So that's definitely a big part of it. Another big part is just their massive investing machine. You know, Ann and I are really just exploring their real estate investing. But that's just one piece of their investing arm. Another piece is their investment manager called Ensign Peak Advisors.

14:42According to a Securities and Exchange Commission filing, its portfolio held over$60 billion in assets at the end of June. And so when we speak to sources about how they see the Mormon church's real estate investing arm, for example, or their investment arm, we hear them being referred to like a sovereign wealth fund. They have a lot, a lot of money. What we've been hearing from some academics that study the church is that the church makes a lot of money from the tithing. It's been growing its investment portfolios. But it's also growing a lot of membership outside of the U.S., maybe in countries where the population there.

15:19cannot provide the same kind of tithing and income as the U.S. has. And so they're really looking at building up their reserves so that they could fulfill their missions in some of these other countries to serve their members. Why does it matter that there's so little we know about the size of the Mormon church's holdings and even in some cases whether they are the ones behind a specific project? I mean, a lot of their own members have been concerned about the lack of transparency because they want to know that what they're tithing is going into the church's mission and what they believe in. And there's almost no clarity as to what exactly is going on and how the money is being used.

16:00There was a former investment manager at Ensign Peak Advisors who went on a 60 Minutes interview. He was a whistleblower and alleged that the church actually had a lot more in assets under management than what it's reporting and that it's basically like a clandestine hedge fund that's misleading members. In 2023, we had the church and Ensign Peak advisors pay$5 million to settle Securities and Exchange Commission charges that the church used shell companies to hide its holdings and avoid disclosure requirements. So the church didn't deny the SEC's allegations, saying at the time it regretted, quote, mistakes made.

16:37It said the former investment manager's claims were, quote, unfounded allegations by a former employee who had a different view on how the church should manage its resources. How about on the ground, Natalie, in the communities where the Mormon church is building? How are people responding to its approach to growth? Much of the land that they own and are positioning for development are rural land. You know, they're environmentally sensitive land. They were used as ranch land. They were used as farmland. So I think there's always concerns about mass development and how it impacts the wildlife corridors, how it impacts water usage, how it impacts the environment there.

17:14One area that we saw this transpire is in the Florida region. They own a massive ranch called the Deseret Ranchland, and they're trying to develop some of it, which they are doing with Sunbridge, one of the developments that I spoke about. And just over two years ago, the church tried to position even more of their ranch land for development. And if they had succeeded with that, they would have basically tried to annex a big chunk of that ranch land into the city of Orlando, which was seen as a more developer-friendly locale. It would have really impacted, you know, the different types of wildlife corridors in that area.

17:54It would have taken away control that the current county that they're in, which is Orange County, would have had over that growth, which would have spanned multiple decades. And so a lot of people, a lot of council members spoke out against that. Right. You reported that was 52 ,000 acres, bigger than Manhattan and San Francisco combined. After the pushback, that expansion was halted in 2024, although Orange County did allow the city to annex another plot of Mormon-owned land for another project in the area. That gets at what one of the people you spoke with pointed out, that this development approach that the Mormon church has tends toward sprawl versus, you know, dense urban development.

18:38Right. And there's always going to be like arguments from different residences, nimbyism, not in my backyard, around sprawl. Some people love it. In the tributary case, that's also an area that had been more ruled that's just starting to get developed. And there seems to be a lot of excitement about what the church is going to bring. For example, the city council woman that we spoke to, Amy Wiles, who has a house pretty close to the tributary site, is really excited about a grocery store that the Mormon church is going to bring. Right now, they don't really have anything close by. But if we look at some of the areas in Florida, you have a lot of residents that are quite concerned about what such mass development could do.

19:18What has the Mormon church said about this strategy and the questions that it raises and what their future holds? The Mormon church have always said that real estate, priming land for development, that all goes back to their philosophy of building up financial reserves for the church's mission, for making sure that they're financially sustainable in the future, for providing humanitarian mission work, and for building temples too. In response to Natalie and Anne's reporting, the church added, quote, due to the population growth of cities, some legacy land holdings of the church are in the path of growth and better suited for residential and commercial development than farming.

20:00The comment from the development head of Property Reserve added that the commercial real estate portfolio has grown, quote, purposefully to provide durable cash flow to fund the church's mission. But going back to your question about like why this matters, why does it matter that the Mormon church has so much real estate? They have a lot of influence. They have a lot of influence all across the country. They're one of the largest landholders. And now they're not just holding land for farmland or ranch land. They're building houses. They're building communities. They're building industrial warehouses, commercial development that impacts the communities that they're building in, the neighboring communities.

20:36And they're so big that it impacts the cities that they're building in. These are all very significant projects. They're not tiny sort of one-off housing developments. These are mass developments that they will likely and could likely expand into.

20:55This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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