HYM Investments is seeking approval to build 6.1 million square feet of commercial space and 10,000 housing units on the 161-acre Suffolk Downs site spanning parts of East Boston and Revere. Image courtesy of HYM.

The billionaire investor behind the Suffolk Downs racetrack redevelopment is a fourth-generation Texas oilman who inherited the family fortune at age 17 after his father died in a tractor accident on his Houston-area ranch.

After setting up a Newtonville-based family investment office, Cathexis Holdings LP, in 2016, William Bruce Harrison partnered with experienced Boston developer HYM Investment Group on the $159 million acquisition of the racetrack property in May 2017. HYM is seeking approval to build 6.1 million square feet of commercial space and 10,000 housing units on the 161-acre site spanning parts of East Boston and Revere.

“These are hard investments to make, to come into a large project like this that is not [permitted] yet,” HYM Managing Director Thomas O’Brien said. “We have to work very hard to protect our own investment. It’s the nature of our business that we find capital from large institutional investors.”

‘Our Ideal Hold Time is Forever’

Cathexis Holdings and other entities at the same Houston address have a 95 percent interest in the Suffolk Downs redevelopment, according to a statement of beneficial interests filed with the Boston Planning and Development Agency.

Family offices are a growing source of capital in commercial real estate, as ultra-high net worth investors seek to maximize returns through direct investments. Run by in-house investment managers or third-party advisers, the lightly-regulated investment vehicles typically have lower fee structures than hedge funds and private equity funds. Commercial real estate made up 17 percent of family offices’ investments in 2017, according to a 2018 report by Campden Wealth and UBS.

Cathexis – which states on its web site that “our ideal hold time is forever” – is particularly well-suited for complex projects with long timelines, HYM’s O’Brien said. The Suffolk Downs project would be the largest single residential project in Boston history and is expected to take up to 20 years to build out. Many closed-end real estate funds liquidate their holdings after 7 to 10 years.

“Family offices are more willing to accept entitlement risk and construction risk, so they’ll come in a little bit earlier,” O’Brien said. “The returns on these projects are getting very tight and it’s hard to find projects that are interesting for people.”

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Cathexis Holdings and other entities at the same Houston address have a 95 percent interest in the Suffolk Downs redevelopment, according to a statement of beneficial interests filed with the Boston Planning and Development Agency. Image courtesy of HYM Investments.

A Fortune from Oil, Ranching

William Bruce Harrison’s great-grandfather, Dan Harrison, laid the foundation for the family’s fortune when he built an oil and ranching empire across Texas, according to a Forbes report. Harrison’s father, Bruce, died in June 2004 at age 54 when he fell from a tractor at his ranch outside Houston after an apparent bee attack, the Houston Chronicle reported at the time.

His son joined the family firm, Harrison Interests Ltd., in 2008, according to legal documents in a breach of contract dispute with his uncle. A Texas appeals court ruled in the younger Harrison’s favor in March 2017.

Houston-based Cathexis established a Massachusetts outpost in July 2016 when it filed registration papers with the Secretary of State’s Office for a limited partnership and general partnership.

According to a LinkedIn profile, Josh Friedman is managing partner at the Newtonville office. Friedman was an investment analyst with Boston-based hedge fund Baupost Group before joining Cathexis in 2015. Reached by phone this week, Friedman said he was unable to comment.

In a statement provided through HYM, Cathexis said, “This project will create the single-largest addition of housing units to the Boston market in history, meet the demands of the local innovation economy with new lab and office space, and support the local neighborhoods with job creation and economic opportunity. Overall, we’re encouraged by the growth of the Boston market and confident in the long-term prospects for housing and office demand.”

Investments Include Hickory Farms, Hair Extensions

According to its web site, Cathexis invests in mineral rights, venture capital and private equity deals, along with real estate developments in the $100 million-plus range. Cathexis participates in real estate projects as co-general partner, providing predevelopment capital and co-investments in general partnerships.

“They are here, and they are going to be a good candidate for outside-the-box investments like Suffolk Downs,” said a local commercial real estate executive not involved with the Suffolk Downs transaction.

Steve Adams

Cathexis is involved with a similarly-sized real estate project in Houston, where it’s seeking to develop an 8 million-square-foot mixed-use development on 150 acres in a partnership with Houston-based Midway Cos.

And in its role as investor in established companies, Cathexis has acquired ISG Plc, a British contractor with more than $2 billion in annual revenues, along with Chicago-based specialty food vendor Hickory Farms and a California vendor of hair extensions known as Bellami.

“Given that we are owned by a single individual, we are extremely nimble, with no boards or committees and the ability to make decisions quickly. We can be highly creative and take risks that are not down the center of the fairway for most investment firms,” Cathexis’ web site states.