ProLogis (NYSE: PLD), the world's largest owner, manager and developer of distribution facilities, has announced that Jeffrey H. Schwartz has resigned as the company's Chairman and Chief Executive Officer.
In conjunction with Schwartz's resignation, Walter C. Rakowich, former president and chief operating officer of the company, has been named chief executive officer by the Board of Trustees and will join the company's Board. Stephen L. Feinberg, the Board's lead trustee, will assume the role of Board chairman.
"I would like to thank Jeff for his vision and leadership on behalf of the Board and ProLogis' entire global organization. Jeff was the key driver behind our international expansion and accomplished a great deal during his 14 years with the company," said Feinberg. "With the economy facing significant headwinds due to dislocation in the credit markets and the negative effect on business conditions around the world, Walt brings a deep background in real estate, encompassing both operational and financial expertise. Together, the senior management team is prepared to make the tough choices necessary to ensure the company is positioned to weather this storm and preserve its market leadership position."
Rakowich most recently was ProLogis' President and Chief Operating Officer from 2005 until the present. Prior to that, he was Chief Financial Officer from 1999 through 2004. Additionally, he held various market-level positions, including serving as Mid-Atlantic Regional Director from 1995 to 1998. Before joining ProLogis, Rakowich held several positions with the Trammell Crow Company in Los Angeles, following the completion of his MBA at Harvard Business School.
Rakowich said, "Together, our senior management team has developed a solid plan to reposition the company, and I look forward to working with our team to address the challenges ahead. We believe the current share price substantially understates the company's worth but realize we need to prove that with actions rather than words. Both the Board and our entire management team are committed to significantly enhancing the intrinsic value for all our stakeholders."
"Building ProLogis into the leading global provider of logistics facilities has been truly rewarding," said Schwartz. "Today's market calls for a focus on de-leveraging, cost management and greater operational efficiencies, and I have confidence in management's ability to execute that plan under Walt's leadership."
Dividend cut enhances liquidity
The Board has targeted a new annualized dividend of $1.00 per common share for 2009, subject to market conditions and REIT distribution requirements. This new rate revises the $2.28 per share level previously announced for 2009 and represents a 52% reduction from the $2.07 per share rate declared during 2008. This action will permit the company to retain additional capital, which will be used to repay debt and strengthen the balance sheet.
Targeted initial reduction in general and administrative expenses of 20 to 25%
The company also said that in response to the tough economic climate, over the near term it will reduce G&A spending by 20 to 25% through a combination of a reduction in workforce and cutting of business spending.
"Obviously, the credit markets and overall market conditions make it clear that we need to significantly reduce expenses," said William E. Sullivan, Chief Financial Officer. "Difficult times require difficult choices, and we are currently implementing our expense reduction plan."
New development on hold pending improved market conditions
The company said that it intends to complete those development projects currently underway. Going forward, however, the company does not expect any new development activity for the foreseeable future and will not pursue entry into any new markets until conditions improve and liquidity returns.
Source: Porter Novelli