In operation less than seven months, Hartford-based CBRE Realty Finance has already parted ways with its CEO. The real estate investment trust ousted its president, Keith Gollenberg, last week. The move comes just days before the company is expected to announce its first quarter results.
Company officials were tight-lipped over Gollenberg’s departure. But in a prepared statement, CBRE Board Chairman Ray Wirta said, “The board has decided that, at this time, the company will benefit from an infusion of new leadership to implement our business plan going forward.”
Concurrent with Gollenberg’s ouster, CBRE said it is immediately changing its operating plans, and will no longer make equity real estate investments through joint ventures.
Both changes were striking, in that each was listed almost exactly a month before in the company’s annual 10-K filing with the U.S. Securities and Exchange Commission as significant risk factors for the new organization.
CBRE Realty Finance is basically a pool of money. It is managed by commercial real estate giant CBRE and sister company CBRE / Melody. All its employees are employees of those companies, which it calls its manager.
In its annual report, filed March 26, CBRE Realty Finance cautioned that, “We are dependent upon our manager and certain key personnel of CBRE and CBRE/Melody provided to us through our manager and may not find a suitable replacement if … such key personnel are no longer available to us.”
The company went on to specifically assert that it believes “our success depends on the continued service of the management team of our manager, including Keith Gollenberg…The departure of any of the members of the management…could have a material adverse effect on our performance.”
The Hartford-based fund also warned a month ago that “joint investments could be adversely affected by our lack of sole decision-making authority and reliance upon a co-venturer’s financial conditions.”
Performance In Question
Gollenberg was tapped by real estate giant CB Richard Ellis Group Inc. to lead the IPO for CBRE Realty Finance. Gollenberg is a 25-year veteran of real estate debt and equity finance, and was previously the head of Cigna Investment Management’s Capital Markets Group. He serves as vice chairman of the Mortgage Bankers Association of America’s Capital Markets Committee.
Wirta will assume CBRE Realty Finance’s CEO responsibilities while the company looks for a new leader. He praised Gollenberg. “We want to thank Keith for his valuable contributions in helping to create and launch the company, and completing our initial public offering,” Wirta said in a written statement.
But the IPO didn’t raise as much money as was planned. In late September 2006, the Hartford fund announced it had issued 8.5 million shares, and that holders of private stock acquired a year before had sold another 1.1 million shares, all at $14.50 per share. But the deal’s prospectus estimated that shares would be priced between $15 to $17 per share, and the private investors had originally planned to sell an additional 400,000 shares.
Company officials declined to return numerous calls for comment.
