Hold fire on UTIMCO’s Burck

As The Daily Texan reported Friday, a former UT System chancellor, R.D. Burck, serves on the Executive Committee of the University of Texas Chancellor’s Council, an advising board to the current chancellor, Francisco Cigarroa. Cigarroa serves on the board of directors for the University of Texas Investment Management Company, an independent company that manages the investments of both the UT and Texas A&M systems. Among UTIMCO’s many investments is a $1.5 million stake in American Campus Communities, a student-housing company, of which the chairman of the board of directors is none other than
R.D. Burck.  

Absent any new information, it seems that the relationship isn’t entrenched enough to cross the bounds of legality. Burck isn’t actually an employee of ACC, although, as the chief representative of its shareholders, he would have considerable influence over the company. And the investment was made in 2008, three years after Burck left the UTIMCO board of directors, although admittedly, his time on the boards of ACC and UTIMCO overlapped for a period of a year.

UTIMCO spokeswoman Christy Wallace told the Texan that the company maintains a restricted list of businesses that are off-limits for investment, and that no money would have been invested in ACC while Burck served on both boards.

“[American Campus Communities’] public equity securities were on the restricted list when Mr. Burck was on the UTIMCO board, so none of UTIMCO’s investment managers held any of their securities at that time,” Wallace said. “As Mr. Burck is no longer chancellor or on the UTIMCO board, [American Campus Communities] securities are no longer on the restricted list.”

It’s also worth noting that UTIMCO has seen a good rate of return on the money; ACC’s stock has risen by approximately 75 percent in the five years since the investment. And $1.5 million isn’t even a drop in the $21.7 billion bucket that is the UT System’s endowment.

On the other hand, this isn’t the first time UTIMCO investments have been linked to high-profile members of the System leadership. In 2011, the company invested $200 million in a different private investment firm, Post Oak Energy Capital, which in turn invested $60 million in an oil and gas company tied to UT System regent Alex Cranberg that drills on land owned by the University.

It’s impossible to tell whether the investment in ACC happened because of Burck’s involvement. But his and Cranberg’s multi-faceted relationships with UTIMCO are a predictable phenomenon. With such large quantities of money invested in such a large number of businesses, it’s unsurprising that some of it ends up going near the System’s leaders — many of whom are prominent businessmen in their own right.