More turnover at top of REIT manager CNL Financial

The president of the company's wholesaling broker-dealer is the latest senior executive to leave.
MAR 22, 2018

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.

Latest News

Wealth firms report organic growth rebound, but process gaps persist
Wealth firms report organic growth rebound, but process gaps persist

New F2 Strategy research finds more firms growing without M&A, yet one-third still lack a defined growth process.

AI governance gaps leave RIAs exposed to a new wave of cyber threats
AI governance gaps leave RIAs exposed to a new wave of cyber threats

Shadow AI, weak oversight, and no formal policy highlight why advisory firms are more exposed to cyber risk than they realize.

People moves: RBC taps Raymond James veteran for Texas complex
People moves: RBC taps Raymond James veteran for Texas complex

Meanwhile, DPL Financial Partners adds two annuity executives and Prime Capital Financial hires a Mid-Atlantic retirement plan consultant.

Ex-LPL, special needs advisor pleads guilty in fraud case
Ex-LPL, special needs advisor pleads guilty in fraud case

Andrew Komarow pleaded guilty Thursday in federal court in Hartford to defrauding three financial services companies of close to $3.3 million.

Advisor moves: Raymond James lands $700M Truist team in Naples
Advisor moves: Raymond James lands $700M Truist team in Naples

Elsewhere, Cetera picks up a $210 million Connecticut team from MML, while Wells Fargo FiNet adds a San Diego family practice from LPL

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor