I’m not good at the new math, but it may be time for someone in the Oklahoma “legitimate” media — and/or the Oklahoma Department of Securities — to take a look at the happenings at Humphreys Capital!
In case you’re not in the local 1%, that’s the investment firm founded by local ruling-class player Kirk Humphreys in 2012.
As you may know, he is a former OKC Mayor, U.S. Senate candidate, and political pundit who co-hosted Flashpoint on KFOR for many years before being semi-canceled for controversial remarks he made about women, homosexuals, and other people who intimidate straight evangelical white men.
Remember those days?
That controversy occurred way back in 2017 and 2018, at the height of social media cancellation fever.
It’s funny how times change, huh? If those old clips resurfaced today, instead of being cancelled, Kirk would probably become an instant celebrity in the online media, racking up views, listens and guest spots on the Jordan Peterson podcast.
Although Kirk’s views on gays and women would probably earn him a Presidential Medal of Freedom in today’s cultural climate, his firm’s flagship investment income fund — HREIF — isn’t doing so hot.
A well-known investment vehicle amongst the local evangelical gentry, Young Presidents clique, and other people who have attended a Polo Bowl, HREIF has over $1.1 billion worth of real estate holdings in 15 states.
It's one of the big products marketed by Humphreys Capital, which oversees well-known Oklahoma developments like the Wheeler District and Carlton Landing. They are also behind The Canton, which — “Oh Lord Jesus, it’s a fire!” — burned down, probably by Kelly Ogle.
Anyway, HREIF — like most highly leveraged real estate funds — has performed very, very poorly in today’s high-interest rate lending environment.
Check this out:
For the financial illiterate, that’s a pretty awful return, especially when compared to U.S. and international stocks, mainstream cryptocurrencies, and the world’s fastest-growing asset class — Labubus!
To make that poor performance sting even more, the fund recently slashed its distribution from $8-something to $5-something a share, a roughly 40 percent decline!
Yeah, that’s not a good look.
If you were a wealthy person with money in the fund, the poor performance and declining dividend might make you consider withdrawing your money from the fund and placing it in a lower-risk, higher-return investment.
Well, that is if you could.
To make the issues with the fund look even more urgent and glaring, HREIF announced back in the spring that it was "temporarily” suspending redemptions, effectively thwarting investors' ability to withdraw their cash and capital.
According to Humphreys and Co., they took this alarming step because they’re having a hard time “assessing the fair value of their portfolio.”
Here’s a copy of a letter we obtained via the Ogle Mole Network:
Yikes. I’d hate to hear the sound your doctor made when that letter arrived in his Val Verde mailbox! Nothing ruins a wealthy person’s golf game like finding out the funds they placed in their buddy’s family’s REIT are frozen solid!
You may have noticed the letter above was signed by HREIF’s “CEO Blair Humphreys.”
Son of Kirk, nephew of Craig, cousin to Sam, Blair’s an MIT grad, city planning expert, and – based on the design of the Wheeler District – a big fan of the Stepford Wives movie.
He was in charge of HREIF, but recently “made the decision to step down.” Here’s a snippet of a letter we obtained via The Ogle Mole Network that breaks down that news:
To our investors,
We are writing to share an important leadership transition at Humphreys Capital and to reaffirm our continued commitment to the long-term success and stability of the firm.
After more than a decade of leadership and service, Blair Humphreys has made the decision to step down from his role as CEO of Humphreys Capital. Blair’s leadership as EVP and CEO has helped establish Humphreys Capital as a trusted steward of capital and a respected investment firm with a distinct focus on long-term partnerships and real estate strategies that deliver enduring value.
Blair will continue his efforts to develop Wheeler District, a 160-acre urban neighborhood in the heart of Oklahoma City, and pursue other independent business opportunities. We support Blair in this transition and are grateful for the lasting impact he has had on Humphreys Capital.
I’ve met Blair a few times. I have nothing mean to say about him, his ferris wheel, or the time he cut me off in the school pickup line. He’s a really nice guy!
That being said…
If his uncle gave him some of Jim Traber’s truth serum, even Blair would admit it’s probably not the best look for Humphreys Capital and it's HREIF to move on from a familial CEO just months after freezing all fund redemptions and slashing dividends.
I’m not sure investors should be straight-up panicking, but as the Canton blaze taught, where there’s smoke there is usually a five-alarm fire!
Then again, maybe everything’s fine.
Lots of big investment funds have paused withdrawals in the past couple of years (see Blackstone), and all REITs are struggling in the high-interest-rate environment.
Plus, maybe Kirk is bringing aboard a more experienced CEO from outside the family tree to provide a fresh look at the firm's strategy and holdings, and restore investor confidence.
Well…
A search committee composed of trusted advisors has been established and engaged to lead a thoughtful and deliberate process for vetting candidates to be the permanent CEO. They plan to complete the process and deliver a clear recommendation in the weeks to come.
To ensure continued leadership and organizational stability, Grant Humphreys has been appointed as the Interim CEO of Humphreys Capital. Grant brings decades of leadership experience and a longstanding commitment to the core values of our organization.
He will continue in his roles as CEO of Humphreys Company, the primary stakeholder of Humphreys Capital, and as Town Founder of Carlton Landing.
Oh, so they brought in Kirk’s other kid — the mustached behind that Eufaula paradise where people literally swim in their own shit — to watch over things until a new CEO arrives. That’s good to know. In other news, that sound you just heard was some golfer at Gaillardia yelling “FOOOOORE!”
Around the same time that letter went out, Grant and Kirk shared an unlisted video on YouTube to calm the fast-beating hearts of wealthy locals, trust funders, and Young Presidents who sunk their savings into the fund.
In the video, they tried to justify why they slashed dividends and explained that redemptions were being brought back, but with punitive strings attached.
For example, investors who want to cash out will have to take a 20% hit on the value of their shares, with that discount gradually shrinking by 2% each quarter. On top of that, redemptions will only be allowed if enough new money comes in. Specifically, for every $2 invested, only $1 can be withdrawn.
I'm a lowly community college hall of famer, so I don't know what a lot of that technical jargon means, but kudos to the art director for tossing in all the various camera angles to make the video interesting. Also, whoever is in charge of trimming Grant's mustache should get a raise. Well done.
Anyway, at this point in the article, you’re probably wondering why I’m spending so much time writing about boring real estate investment trusts, opaque capital firms, and other topics only people who sit in the lower bowl at Thunder games care about.
Well, this is because…
A) We don’t really have a local business media to look into this type of stuff anymore. Like, do you think whatever the Journal Record has become is going to cover this? Hell, the only business news The Oklahoman even covers anymore has to do with far-fetched development projects and closed restaurants!
B) The success – or lack thereof – of Humphreys Capital projects kind of affects Oklahoma taxpayers.
In case you forgot, Kirk Humphreys has done an incredible job using his political clout, wealth, and government connections to secure bookoos of TIF funding for projects like Wheeler District and Carlton Landing. In fact, the Wheeler District got $120,000,000 alone in TIF funding!
If something catastrophic or Madoffian happens to the fund and it goes under, does that mean taxpayers could be screwed?
I don’t think so. From what I’ve gathered, the TIF credits go to various LLCs set up by Kirk Humphreys and his family, and don’t go directly to the HREIF. Basically, the investors in the HREIF don’t get to benefit from the tax credits. Unlucky them, huh?
Anyway, if you have any tips, inside scoop, or boring stories that our ever-dwindling legitimate business media should be covering but isn’t, hit us up on the TLO Tip Line.
Stay with The Lost Ogle. We’ll keep you advised.
