After three years as chief executive of ProLogis, Jeffrey Schwartz has stepped down, and the Denver-based company says it will halt new development.
Schwartz declined to comment on the reasons for his resignation from the biggest developer and manager of warehouses in the world. He said he intends to spend time with his family and friends.
“When you look at economic conditions and the global economic tsunami, you start to recognize what’s really important and constant in your life,” Schwartz said.
ProLogis shares closed Wednesday at $4.47, down 73 percent since the company’s third-quarter earnings call Oct. 23. Year-to-date, the stock is off more than 85 percent.
Walter Rakowich, formerly president and chief operating officer, has replaced Schwartz, who became CEO in 2005 and chairman in 2007, as CEO. Board member Stephen Feinberg has been named chairman.
“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,” Rakowich said in a statement released by the company.
Feinberg and other board members could not be reached for comment.
Lou Taylor, an analyst who covers ProLogis for Deutsche Bank Securities Inc., said he believes there was a disagreement about what direction the company should take.
“It sounds like the board wanted to drastically reduce the whole development business,” he said. “Jeff may have said he disagrees and wanted to continue on the path they were on.”
Schwartz started the company on its path to dominating the global distribution business in 1996 with its first international expansion into Mexico.
ProLogis had $11.1 billion of outstanding debt as of Sept. 30, including $911 million in bonds due over the next two years and $3.2 billion drawn on credit lines and letters of credit due next October. If rents from its properties fall because of a recession, refinancing that debt will become a greater challenge.
During its quarterly earnings call, company executives outlined how they would meet company debt covenants.
“We concluded they can fund themselves,” Taylor said. “We were under the impression that was still going to be the case.”
Taylor said the rapid global-expansion strategy isn’t to blame for the company’s financial straits but that it has put pressure on its business model.
The company also said Wednesday that it would cut its annual dividend rate from $2.28 a share to $1 a share. That should save the company an estimated $330 million a year, according to a report by analyst Christopher Haley at Wachovia Capital Markets LLC.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
