Gary Garrabrant, the US real estate veteran, has left Equity International, the firm he co-founded with Sam Zell in 1999.
News of his departure has been reported in the Wall Street Journal, which said a management reshuffle had taken place at the company, the result of which has also seen chief strategic officer, Thomas McDonald, leave the company.
No statement has been issued by Equity International though the company’s corporate website no longer lists Garrabrant as part of the senior management team and Zell is described as founder and “interim” chief executive officer.
A statement forwarded to the Wall Street Journal by Zell said he had been actively engaged in the business and that the firm had “a deep well of expertise” to contribute during the transition.
The newspaper also reported that any new chief executive would have to win approval from a committee of Equity International investors or the firm could be compelled to cancel future capital calls. In addition it said fund guidelines required Equity International to suspend making any new investments until a new CEO had been appointed and approved by investors.
The latest fund raised by the company was Equity International Fund V which attracted $650 million in equity commitments. That was the firm's largest fund to date. As PERE reported at the time of the fund close last October, it continues Equity International's strategy of co-investing with select operating partners in both existing and newly formed companies, with a focus on scalable operating platforms. The firm is seeking opportunities in emerging and frontier markets.
In 1993, Garrabrant set up a real estate hedge fund, Genesis Realty Capital Management, with former colleague Michael Berman. It was backed by Zell, whom Garrabrant first met in 1981 while working for Chemical Bank.
Together Garrabrant and Zell started looking at Mexico in earnest in 1997, before they had officially created Equity International, but in preparation for the firm's first fund, Equity International Fund I, which closed on $370 million in August 1999.
In a 'Blueprint' interview with PERE in 2009, Garrabrant dismissed suggestions the firm was Latin America-centric. “We are agnostic, we don't have a Latin theme. We have just seen such great opportunities in the region,” he said. “We travelled so early, so often and kept up that pace that we are always seeking the greatest opportunities without regard to geography.”
In that interview, Garrabrant also said the firm was keen to expand Equity International's presence in China. The firm has invested in Xinyuan Real Estate, a Beijing-based homebuilder focusing on middle-income buyers in China's second-tier cities.
In addition, the self-styled ‘relentless’ worker said he had spent considerable time looking at Russia and India but was yet to find the right partner. When it comes to sub-Saharan Africa, he added the firm was in “learning mode” as it talks with several corporate private equity firms about the opportunities in the region.
Asked whether the private equity real estate industry would see Equity International target distressed opportunities in the US, Garrabrant said “no” without hesitation. Although he said Zell was personally contemplating corporate distressed debt investments, for Equity International, emerging markets were the way forward.
“Frankly from our first fund forward we've consistently had high enthusiasm for emerging markets. Part of that is because we've had world-class partners and invested in terrific companies, but it also comes from being early and having courage. I don't think there is any comparison between emerging markets and developed markets in terms of the growth potential for real estate-related businesses,” he said.