Bill Gates’s divorce pulls his Water Street Tampa investment into spotlight

The $3.5 billion Water Street Tampa development enveloping a swath of downtown Tampa has largely been presented as the vision of a team led by Jeff Vinik, owner of the Tampa Bay Lightning.

But Water Street has another partner. The developer in charge, Strategic Property Partners, is a joint venture between Vinik and Cascade Investment, the investment firm funded by one of the world’s richest men: Bill Gates.

Cascade is very much a silent partner. When its investment in Water Street was announced in 2014, then-Lightning executive Tod Leiweke said Gates and his team “do not want to be out front.” And for seven years, they haven’t been, letting Vinik and Strategic Property Partners be the public face of Water Street.

Lately, though, Cascade Investment has entered the public eye in a big way.

The multi-billion-dollar divorce between Gates and wife Melinda French Gates has put many of the couple’s assets and investments into the open. Billions in Cascade holdings have already been split up, with millions of shares in companies like AutoNation and Deere and Co. going to French Gates. Against this backdrop are reports of alleged workplace harassment by Gates and Cascade’s top executive, Michael Larson, who coordinated the Tampa investment.

Cascade’s financial commitments to Water Street’s hotels, offices and residences have never been disclosed. But the divorce shines a spotlight on just how deep-pocketed and influential the company is.

“In spite of their vast holdings, they are very much a hands-on partner,” said former mayor Bob Buckhorn. “I think they are looking to this as a model for future investments — that if you could do it here, you could export this model elsewhere in the country.”

Strategic Property Partners referred questions to a spokesperson for Cascade, which declined to comment. A Lightning spokesperson referred questions for Vinik to Strategic Property Partners, who declined to comment on his behalf.

Vinik is a partner in a team of local investors that has loaned $15 million to the Times Publishing Company, which owns the Tampa Bay Times.

Cascade’s portfolio is reportedly worth around $50 billion, about the same as the endowment of the Bill and Melinda Gates Foundation, one of the world’s largest global philanthropic organizations. The company’s holdings include a wide array of stocks and real estate, including hundreds of acres of farmland in north Florida and Georgia. For a while, it owned a chunk of the Six Flags theme park chain.

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At the time Cascade came to Tampa, the downtown development had no name, other than the colloquial “Vinikville,” and the plans Vinik had disclosed were smaller in scope.

Vinik had started amassing property around Amalie Arena after buying the Lightning in 2010. By mid-2014, his companies had nearly 25 acres. That year, he publicly projected the development would encompass 3 million square feet at a cost of $1 billion.

After Cascade got involved, everything got bigger.

Strategic Property Partners’ real estate footprint bloomed outward, encompassing the Tampa Marriott Waterside hotel, the old ConAgra (now Ardent Mills) flour mill and land formerly owned by Port Tampa Bay and the Tampa Hillsborough Expressway Authority. Today, the company estimates the project will encompass 9 million square feet at a cost of $3.5 billion.

As the project grew, so did commitments of public funding. The city and Hillsborough County pledged up to $100 million in funding to reimburse developers such as Strategic Property Partners for select facets of new downtown projects, including infrastructure. ProPublica reported that Strategic Property Partners in 2018 lobbied then-Gov. Rick Scott to label Water Street an opportunity zone, affording developers certain tax breaks for new investments.

Meanwhile, in 2017, a Hillsborough legislative delegation lobbied for the creation of a Water Street independent special district, which would allow it to collect assessments from commercial property owners to pay for neighborhood investments such as parks and Wi-Fi. The district was 50 acres then. In April, it officially expanded to 73.8 acres.

Cascade’s involvement coincided with Water Street’s goal of becoming the world’s first WELL-certified city district, a standard administered by the International WELL Building Institute that tracks how health and wellness are incorporated into community design. That institute was created in 2013 by a health-focused real estate company called Delos. In 2015, Vinik and Cascade became the lead investors in a $108 million round of equity fundraising for Delos. In 2019, Water Street received WELL certification.

Strategic Property Partners has sought out funding sources other than Cascade. In late 2014, developers got a $110 million loan from Massachusetts Mutual Life Insurance Company, according to mortgage records filed with Hillsborough County. In June 2019, Vinik mortgaged the Lightning’s lease of Amalie Arena for a $102 million loan from Goldman Sachs.

In September 2019, the developers borrowed $644.1 million from Bank OZK against several properties throughout Water Street. At the time, Bank OZK CEO George Gleason called the project a “very conservative, high-quality project with great sponsorship,” according to a transcript of a call with investors.

Should Cascade’s financial backing falter, one needn’t look far for an example of the potential impact.

In 2009, the Bill and Melinda Gates Foundation pledged a grant of up to $100 million to Hillsborough County schools. It ended up being about $80 million. Much of the money went toward rising teacher salaries, contributing to a dangerously ballooning budget. When the grant ran out, the district couldn’t afford the new costs, leading to staff cutbacks and contributing to an ongoing budgetary crisis.

That said, couples with such resources as vast as Bill and Melinda Gates don’t really face the same financial constraints as other divorcing couples, said Stuart Slotnick, co-chairperson of matrimonial and family law at New York’s Buchanan, Ingersoll and Rooney, which handles high-net-worth divorces across the country. Their combined fortune means no investment or project will ever run out of money, or that they’ll need to sell off investments to make ends meet.

“He couldn’t run out of capital if he tried,” Slotnick said of Gates. “That’s the risk of projects coming to a halt in more, let’s say, run-of-the-mill divorces, is that capital becomes the issue.

“The fact that assets are being transferred from him to her voluntarily at this point also shows you that this divorce is going to be worked out without kinks, without bumps in the road. Because quite honestly, when you’re talking about this amount of money, there’s nothing to fight over.”

Water Street could also end up with a Gates problem that goes beyond money.

The New York Times reported in 2019 that Gates had a relationship with Jeffrey Epstein that began in 2011, after the well-connected financier was already a convicted sex offender. This past week, the Daily Beast and New York Times reported that French Gates found her husband’s ties to Epstein unsettling, and were a factor in her decision to seek a divorce.

Outside his relationship with Epstein, Gates had displayed what the New York Times called “questionable behavior” toward women at Microsoft and the Bill and Melinda Gates Foundation, asking out employees and prompting at least one internal investigation.

The New York Times also reported that Michael Larson, Cascade’s top executive and the person in charge of Gates’ fortune, faced a sexual harassment complaint of his own in 2017. The newspaper reported that the case was settled with a nondisclosure agreement. An independent investigation followed, but Larson is still in charge of Cascade. A Cascade spokesperson declined to comment on Larson.

It was Larson whose friendship with the Lightning’s Lieweke got the Cascade deal rolling in the first place, Vinik has said. And it was Larson who Buckhorn met with years ago to push Tampa’s potential for investment.

“Tampa, historically, was not a place that would be top of mind for somebody like Michael Larson,” he said.

Buckhorn never did meet Gates. But he believes the team Cascade has watching the project, including Larson, won’t be deterred by the divorce.

“My sense is that Cascade is fully invested in this project, emotionally and financially,” Buckhorn said. “I’m not privy to the personal details, but if I were Cascade, this would be an investment I would want to see to the end.”