AMERICAS NEWS: Changing of the guard

Events always come in threes. For JE Roberts Companies and its private equity real estate arm, JER Partners, that's precisely what has happened over the past few months.

Not only did JER lose its European president Malcolm Le May in February, after he resigned his position following six years at the company, but that same month also saw founder Joseph Robert undergo treatment for brain tumours. Robert is believed to have had two tumours removed and is currently having chemotherapy and radiation treatment. A spokesman said Robert was “doing very well”.

Pralle: shock departure

Now though the firm has been shaken once again, following the departure of president and chief operating officer Michael Pralle. The firm has declined to say why Pralle left, and at press time Pralle was unavailable for comment.

After just 18 months at the helm of the McLean, Virginia-based firm though, the news has come as a shock to many.

Appointed chief operating officer in October 2007 by founder Joseph Robert, Pralle told PERE last year that he wanted to grow the private equity real estate firm into a “global player”, not least in emerging markets. His hiring was followed by a recruitment spree, with many key professionals being plucked from Pralle's former employer, GE Real Estate.

As part of Pralle's plans to transform JER, he hired former Starwood managing director Dwight Arnesen as JER's US distressed expert; Jim Green and Mark Chamieh, from Citigroup Property Investors and UBS Global Asset Management, to help build JER's capital-raising teams and Brent Feigenbaum from GE to lead the company's brand expansion. He also hired a raft of executives to build JER's presence in Brazil and Mexico.

The past six months though have been all about retrenchment for JER Partners. The firm has not been active in any capacity since at least August 2008, with few significant transactions made during the whole of last year.

JER has been hit by the downturn, with one UK investment, the development firm City Lofts, recently filing for administration. Sources recently told PERE the firm has switched its focus to being more asset management driven rather than investment focused.

The firm certainly has some legacy assets to contend with, not least the $2.1 billion acquisition in July 2007 of real estate investment trust Highland Hospitality Corporation, which owned 28 hotels in 14 US states. During 2007, JER acquired roughly 40 properties valued at more than $6 billion and sold around seven for an estimated $550,000, according to data provider Real Capital Analytics.