Fla. Project Causes REIT Furor
Friday, November 17, 2006
The board of Republic Property Trust, a District real estate company, is trying to force out two of its top executives after an internal review of their involvement with a city official in West Palm Beach, Fla., who voted on a mixed-use project Republic was hired to build there.
Richard L. Kramer, founder and chairman of the publicly traded real estate investment trust, and Steven A. Grigg, its president and vice chairman, are in discussions with the board about their positions, according to a recent filing with the Securities and Exchange Commission. The board is also considering "a negotiated termination of [Grigg's] employment."
The filing notes that Republic Properties Corp., a private company wholly owned by Kramer and Grigg, hired Raymond Liberti, a West Palm Beach city commissioner, as a paid consultant during a period when Liberti voted favorably on Republic Property Trust's project to build a new city hall, library, photography center and museum in the center of West Palm Beach. Kramer and Grigg own about 11 percent of the trust.
Liberti, who resigned from his job in May, was sentenced last month to 18 months at a federal prison on charges of mail fraud and witness tampering on a separate matter having nothing to do with Republic Property Trust.
The audit committee of the trust's board of trustees investigated the matter and "uncovered no wrongdoing or impropriety on the part of Republic Property Trust," according to the filing. Mark R. Keller, chief executive of the real estate investment trust, did not return phone calls seeking a comment.
Kramer and Grigg denied any wrongdoing. "The charges and attempt to purge myself and Mr. Kramer have been wrongful and have not been in the interest of the shareholders or the company," Grigg said yesterday. "We are not resigning from the board nor from our positions as chairman and vice chairman."
Kramer said: "We see this as a mechanism for the board and the current management to force us out of the company for whatever agendas they have. They have shamefully wasted the resources of this public company and its shareholders on this escapade that has led nowhere. I have no intention of resigning."
Bill Moss, a West Palm Beach city commissioner, said he was disturbed by Republic's role. "Liberti was being paid by Republic and that had to influence his vote," he said.
Kramer was a co-owner from 1973 until 1994 of District-based Western Development Corp., which was involved in the development of shopping malls including Potomac Mills in Prince William and Sawgrass Mills in Fort Lauderdale, Fla. Grigg was a senior vice president at Western Development.
In the 1980s, the two founded Republic Properties Corp., best known for developing the $1 billion Portals project in Southwest Washington, the site of a Mandarin Oriental hotel and office buildings whose tenants include the Federal Aviation Administration and the Federal Communications Commission. Republic Property Trust was founded in December 2005. It now owns, develops or manages 4.4 million square feet of office space in the District and Northern Virginia.
Two years ago, Republic Properties Corp. was selected as the developer to build the project in West Palm Beach. The project was turned over to Republic Property Trust when that company was founded. Kramer said Republic Properties Corp. paid Liberti $110,000 over a period of more than a year to work as a consultant.
"The [real estate investment trust] was aware of his involvement," Kramer said. "He was not involved as a city consultant on the project in West Palm Beach in any way, shape or form. His job was to find business opportunities for us . . . to develop land or finding land to buy. There was nothing at all in conflict with his duties and responsibilities on the West Palm Beach board."
The company is no longer developing the project in West Palm Beach after the city pulled out of the deal this fall. There is still tension, however, in West Palm Beach about Republic's role in the project.
City commissioner Kimberly Mitchell said: "Companies doing business in our city are asked to adhere to our standards and ethics. To hire a city commissioner who is voting on your projects violates every one of those. . . . It's very, very disturbing."