BentleyForbes Builds Staff to Boost Holdings As High as $10 Billion

0

BentleyForbes Builds Staff to Boost Holdings As High as $10 Billion

By ANDY FIXMER

Staff Reporter

Fred Wehba, chairman of the real estate investment firm BentleyForbes, has built his castle now he wants to ensure his place in history.

“We want to build a legacy a dynasty, really,” Wehba said. “It’s the dream of my sons to pass along the company to their children.”

In order to build that dynasty, Wehba has taken a cue from medieval kings, whose savvy cross-border alliances added to their holdings and ensured their security.

Since June, Wehba has loosened the grip the family has held on the company since he set up shop in L.A. a decade ago. He’s brought on a handful of senior executives with experience in investment banking and publicly held real estate companies.

The moves are the first steps in what Wehba is touting as an aggressive expansion move. In the last decade, BentleyForbes has cobbled together a $1 billion portfolio of office and industrial properties nationwide, becoming one the largest landlords in the San Fernando Valley.

Now, said Wehba, he wants to see the holdings reach upwards of $10 billion in the next five to seven years, even if it means bringing in institutional investors as equity partners to raise the capital for the expansion. “We want to take the company to the next level,” he said.

To do that, Wehba had to make some room in the executive suite. His sons Fred Wehba II, 32, and Chad, 29, were with their father when he formed the company in 1993 and served until June as president and chief executive and executive vice president, respectively. Others have taken those positions, and the pair have assumed vice chairman’s roles.

In their stead, the senior Wehba lured David W. Cobb from Orlando, Fla.-based Commercial Net Lease Realty Inc., where he was executive vice president and chief investment officer, as BentleyForbes’ president and chief executive. Cobb has also held senior posts at National Capital Holdings Inc., a mortgage origination and securitization company, and at investment banking firms Raymond James & Associates and Donaldson Lufkin & Jenrette.

With Cobb’s hiring, the company formed an executive committee made of Wehba, Fred II and Chad Wehba and Cobb to oversee the firm’s operations. (Wehba has two other sons in the business: Christian, 25, an information technology manager, and Cyle, 22, an associate.)

Control of the business still rests with the family. Wehba, Frederick II and Chad make the final decision whether to buy or sell a property, and BentleyForbes is still capitalized by the Wehba Family Trust.

When BentleyForbes makes an acquisition the Trust puts in 30 percent of the purchase price and the company borrows the remainder from Wall Street banks, Cobb said.

The trust is backed by money Wehba had started to accumulate in Texas. There, he developed a business buying corporate headquarters, entering long-term leases with the sellers, and then selling them. He moved his family to Los Angeles in 1989 from Dallas.

The company’s growth has not been without its hitches.

A 2001 lawsuit brought by Mark K. Lewis, a partner in a Warner Center property, alleged that the Wehba family discounted his interests by inflating its own and underpaying him his share of the building’s cash flow as a result. The case was settled out of court in 2003, but not before exposing the senior Wehba’s 1995 guilty plea on charges he fraudulently concealed his interest in his Beverly Hills home while owing $2.5 million to a failed Texas thrift. He later filed for bankruptcy.

Since then, the company has bought and sold billions of dollars worth of mostly single-tenant occupied office buildings and industrial properties. The firm’s holdings include the 21st Century Plaza in Woodland Hills, the 69,000-square-foot Isuzu Motors building in Cerritos and a Yaohan Plaza Superstore in Torrance.

Over the last year, the focus has been on holding assets for a longer period and building a portfolio of Class-A office buildings.

Now with Cobb on board, it has begun looking for suburban office parks, apartment buildings and newer retail centers. “We’re looking to diversify the portfolio a little bit,” Cobb said. “We already have investment grade properties and we want to leverage those to make more acquisitions.”

To do that, the firm will be opening itself to different equity structures.

Cobb said BentleyForbes is considering selling between 20 percent and 50 percent of its assets outright to raise cash for a larger portfolio buy.

“We’ll sell these assets, take the profit out and apply that to buying more assets,” he said. “And rather than selling others outright, we may roll them into a portfolio and use them as equity in a joint venture with an investor.”

To that end, it has hired Wachovia Securities as its investment banker. “They will be our agent to go into the marketplace and find the right partners for the purchases we like to make,” Cobb said. “It’s like when a private company hires an investment banker to take them public.”

Cobb said that by establishing partnerships with investors, BentleyForbes could control more property while making money on transaction and management fees. “It would provide a source of income the company doesn’t have today,” Cobb said. “And it makes us better prepared if we want to go public in the future.”

The senior Wehba was careful to make the distinction that investors would be putting money into portfolios and individual properties and not the company itself, which he said would remain owned by the family.

No posts to display