Joseph E. Robert’s firms carry on without founder
The death of Joseph E. Robert Jr., the Washington businessman and philanthropist, last week at age 59 prompted an outpouring of praise for a man who rose from a troubled childhood to make billions of dollars in real estate and help thousands of underprivileged children with his charitable efforts.
But with Robert’s funeral scheduled for Wednesday, managers of his companies confront a future without the leader whose exhaustive work ethic and magnetic personality drove the endeavors to such success.
Longtime friends and business associates of Robert’s say that he will be impossible to replace but that the companies and organizations he led may persevere in his absence.
Robert built his real estate companies by raising money when it was scarce and finding tremendous value in properties when others thought there was little to be found. When he was 29, he and partner William J. Wolfe bought into a financially troubled condominium project in Florida and sold the units over the following year.
When the economy soured in the 1980s and savings and loans found themselves with bad real estate on their books, Robert already had experience managing — or performing workouts on — financially distressed real estate for banks. When the government created the Resolution Trust Corp. to liquidate similar assets en masse in 1989, Robert’s company won the first contract, for a portfolio of Texas real estate.
“He predated the RTC in that he recognized how these banks had problems, and he was the guy doing the workouts for them,” said Alfred Checchi, a former chairman of Northwest Airlines who met Robert in the 1980s and later worked for him.
Robert went on to raise enough private equity to do billions of dollars’ worth of deals. He renamed the company JER Partners and created a public mortgage real estate investment trust, JER Investors Trust.
The recent recession, with its catastrophic effect on real estate values, in many ways resembled the period in the 1980s when Robert made his fortune, but it took a toll on the companies, according to observers.
At the peak of the real estate market in 2007, Robert hired Michael Pralle, former chief executive of GE Real Estate, to globally extend JER Partners, then an $8 billion company, through expansion into China, Japan, India and Europe. But Pralle left the company 18 months later. JER Investors Trust flirted with bankruptcy this past summer and was sold to C-III Capital Partners.
“I am sure that it’s had a very, very tough effect on JER, as it has on everybody who is in that business,” said Checchi of the downturn.
Longtime friend Roy Ayers said he considered Robert “the working definition of the American dream” for his rags-to-riches story of self-determination, but he said that the company had taken hits recently.
“Everybody knows that the JER companies are not what they were, but everyone that invested in that made a lot of money for a long time, and they should be grateful for that,” Ayers said.
Now managing director of McBride Real Estate Services in the District, Ayers said that because Robert knew about his brain cancer for more than two years, he had ample time to prepare everyone for life without him. “My guess is that Joe left his house in very good order and everyone who is left to work at JE Robert, if they can’t work with that legacy, then maybe they should get another job,” Ayers said.
Mike McGillis, managing director of JER Partners, said the company has been operating successfully.
“We still have a number of funds that we are managing, and we continue to manage those funds. People are continuing to do the work,” he said.
He declined to say how many people work at JER. “We have a team full of employees who are continuing to manage the business, as they have been for a while now,” he said.
Christopher Kallivokas met Robert in 1981 and later became chief operating officer of J.E. Robert Cos. Now chief executive of RER Financial Group, a Herndon-based real estate and financial consulting firm, he said his expectation for JER was that “as the market changes, it will be successful again.”
“I think that it’s going to be just fine. This [illness] was known about for so long that there was time for a lot of planning,” Kallivokas said.
Regardless of how his companies perform in the future, Robert’s longtime associates — many of whom were drawn to work for him years ago and remained friends — say matching his leadership will be extremely difficult.
“There is no one to replace Joe,” Checchi said.