Gary Garrabrant, the chief executive and co-founder of Equity International left the company for undisclosed reasons. Chief strategic officer Thomas McDonald also resigned from his job. Equity International chairman Sam Zell will immediately take over the role of interim CEO. The sudden departure of top executives is a sign of turbulence for the company’s real estate empire. Sam Zell has invested over $1.5 billion to acquire real estate companies in the past few years.

Gary Garrabrant

Wall Street Journal reported that Mr. Zell already has a CEO in mind. Zell said that he is fully engaged in the business, and the firm has “a deep well of expertise…to contribute during this transition.” Mr. Zell is well known as the top investor in real estate business, because of his successful real estate purchases in the past two decades.

The management reshuffle could lead the company into trouble, as the new CEO must win the approval of a committee consisting of Equity International investors. Otherwise, all the future capital calls will be cancelled.

Equity International has invested in China, Brazil, Eastern Europe, and many other emerging markets through funds. The firm invests primarily in real estate companies instead of properties.

“We realized that the optimal approach was not competing with the local players,” Mr. Garrabrant once told the Wall Street Journal. “We were pioneers and we knew we were on to something.” Most of the companies EI had invested in grew to become major players in the market. The only failure was with Tribune Co. in 2007.

The company raised $650 million for the fifth real-estate fund last year, but half of that money is still lying idle. Equity International has a complex key-person provision, under which certain steps must be taken within a specified time. The firm has to nominate a CEO who must be approved by the investors committee within a time period specified in the fund documents. If the new CEO is rejected, the fund would not be able to make any further investments.