Introduction to Rexford Co-CEOs Out After Elliott Stake
The Rexford takeover rumors seem to have traction. The industrial real estate investment trust indicated as much a couple days ago, after market close, when it announced a chief executive shakeup and a changed capital allocation strategy.
The dual announcements came months after a report that Paul Singer’s Elliott Investment Management built an active stake in the company. Rexford more recently took the opportunity of an earnings call, to disclose that it had met with the relentless activist investor.
Executive Changes at Rexford
Rexford chief operating officer Laura Clark is now in line to succeed co-CEOs and co-founders Michael Frankel and Howard Schwimmer, the company announced. Chairman Tyler Rose, who recently replaced Richard Ziman, said the “transition is the culmination of the board’s multi-year succession planning process.” There’s more to it, according to Newport Beach-based industry tracker and data analyst Green Street. “It appeared Ms. Clark was on the path to eventually succeed Co-CEOs Frankel and Schwimmer upon their retirement, but there is no question that Elliott’s involvement sped up the timeline,” a Green Street analysis read.
Details of the Transition
Frankel and Schwimmer aren’t only dropping their C-suite gigs, but their seats on the board of directors, too, which was characterized as a surprise in a recent BMO analysis. Nonetheless, Frankel and Schwimmer have entered into a transition and separation agreement, each being granted a restricted stock award valued at $22.6 million. That’s more than their $13 million total compensation for 2024. In a separate announcement, Clark said the company would maximize returns by selling assets and reinvesting capital into high-yielding assets and share repurchases. During the latest earnings, the company said it had no planned purchases, only dispositions, a change from its buy-happy days.
Reversal behind Hudson Pac Reverse Split
In other publicly traded, real estate investment trust news: Studio and office owner Hudson Pacific Properties announced a board-approved 1-for-7 reverse stock split that’ll take effect Dec. 1. Reverse stock splits consolidate the number of existing shares into fewer, higher-priced shares and are sometimes done to avoid being delisted — but the company’s shares are trading under $2 per share, with the $1 mark a red flag for delisting. Still, the announcement comes after the Victor Coleman-helmed company’s losses ballooned to hundreds of millions of dollars.
Selling Debt
Distressed debt, anyone? Eastdil is marketing an offering to purchase the mortgage loan connected to a Brookfield-owned office tower on Bunker Hill. The Downtown Los Angeles property, at 333 South Grand Avenue, includes a 54-story office building, called the Wells Fargo Center — North Tower, along with a three-story retail asset called the Halo. The roughly $506 million debt on the Wells Fargo Center — North Tower is in default, but how much the note would fetch, if it trades, is unclear.
Real Estate Whodunit Solved
Cue the Law & Order theme song … The J.J. Abrams’ Bad Robot building mystery buyer is Teddy Schwarzman’s Black Bear. The independent studio founded by Schwarzman — son of Stephen Schwarzman, billionaire chairman and chief executive of Blackstone — purchased the three-story, brick building located in Santa Monica for about $31 million. But will Schwarzman keep Abrams’ esoteric typewriter sign, an inside joke about the Hollywood pro’s personal style and direction choices? Another mystery.
End of an Era
Related California chairman and chief executive Bill Witte is stepping down after more than three decades at the helm. Witte will become chairman emeritus, and two company executives Gino Canori and Ann Silverberg will split the CEO title effective Jan. 1. Canori will head market-rate, mixed-use and commercial with Silverberg in charge of affordable residential developments.
Conclusion
The recent changes in the real estate industry, including the Rexford Co-CEOs stepping down and the Hudson Pac reverse split, indicate a significant shift in the market. The involvement of activist investors like Elliott Investment Management is likely to continue shaping the industry. As companies adapt to these changes, it will be interesting to see how they navigate the challenges and opportunities that arise.
FAQs
- Q: Who is the new CEO of Rexford?
A: Laura Clark, the current chief operating officer, is in line to succeed co-CEOs and co-founders Michael Frankel and Howard Schwimmer. - Q: What is the reason behind the reverse split of Hudson Pac?
A: The reverse split is likely an attempt to avoid being delisted, as the company’s shares are trading under $2 per share. - Q: Who purchased the J.J. Abrams’ Bad Robot building?
A: Teddy Schwarzman’s Black Bear purchased the building for about $31 million. - Q: Who is stepping down as chairman and CEO of Related California?
A: Bill Witte is stepping down after more than three decades at the helm.
