Prologis PLD (NYSE), the global industrial REIT considered one of the largest warehouse developers, announced a number of dramatic changes to deal with the ever growing credit crisis and its impact on the company’s share price. The company’s CEO and chairman since 2005, Jeffrey Schwartz, resigned his positions effectively immediately. In his plac
e, the company appointed Walter C. Rakowich, the current President and COO, the new CEO while lead trustee, Stephen L. Feinberg was slated to take over as chairman of the board. In addition to th
e major management changes the company also announced it would reduce general and administrative expenditures by 20 to 25%. The company further announced a reduction in its slated dividend. These key changes come after the company’s share price, according to a story by John Spence of MarketWatch,
… fell by more than half so far in November…
…The REIT sector has been crushed this year on accelerating financial problems, combined with fears over a slowing economy and retail spending. Funding for commercial real estate has dried up during the credit crunch.
The appointment of Rackowich, an employee of the firm since 1999 when he first began as the company’s CFO, makes for an easier transition. According to Lou Taylor, Deutsche Bank analyst, cited in the MarketWatch article,
We interpret the change as a difference of opinion about future strategy. The board must believe a halt of all construction is required,” …
We will just have to wait and see how Rackowich and Feinberg manage the situation for the firm going forward. They have at least put in place a viable strategy to conserve capital and deal with the continuing credit crisis and growing recession.
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