More turnover at top of REIT manager CNL Financial

CNL Financial Group Inc., a leading manager and seller of nontraded real estate investment trusts, continues to see senior managers exit, with Neil Menard, the former president of CNL’s wholesaling broker-dealer, leaving the company at the start of the month.

Mr. Menard’s departure follows a series of senior executives’ exits at the company.

Thomas Sittema, CNL’s former CEO, left the company in December. The company’s chief financial officer, Tracy Schmidt, also resigned in December. Mr. Sittema had joined CNL in 2009 and Mr. Schmidt in 2004. Mr. Sittema was replaced by Stephen Mauldin and Chirag Bhavsar, who were named co-CEOs of the company.

Mr. Menard was in charge of CNL’s wholesaling broker-dealer, CNL Securities Corp., and was routinely seen at major industry conferences acting as a sponsor and spokesman for CNL products. He joined the firm in November 2015 and is a veteran sales manager of financial products.

Holly Greer, the company’s general counsel, also left recently.

Reached by phone, Mr. Menard declined to comment.

A spokesman for CNL, Monty Hagler, said that the company was firing on all cylinders despite the series of executive changes. CNL’s founder, James Seneff, is fully engaged and is the chairman of a new fund with a focus on private equity and debt, Mr. Hagler said, adding that senior people at CNL have replaced the executives who have recently left.

“It’s not like there has been a drop-off here,” Mr. Hagler said. “Jim Seneff is doubling down on CNL’s future.”

He noted that in November, CNL listed its nontraded business development company, Corporate Capital Trust.

The Department of Labor’s fiduciary standard and new securities industry account statement rules requiring greater clarity in the prices of products have forced nontraded real estate investment trusts to slice their commissions, which could be as high as 7% to brokers selling the product. Since then, sales of the REITs have collapsed, making business difficult for managers like CNL.

Some managers and sponsors are attempting to pivot and sell other products, such as nontraded business development companies and interval funds.

The drop in sales has had serious consequences for the industry. W.P. Carey Inc., one of the companies instrumental in the evolution of the nontraded real estate investment trust business, said last June it was pulling out of the nontraded REIT market and stopped offering new products. And in November, Vereit Inc., a large listed real estate trust, said it was exiting the nontraded REIT business and selling Cole Capital for $120 million in cash and up to another $80 million in fees to be paid over six years based on Cole’s future revenue.