Faced with a greater debt burden than its apartment REIT peers, Colonial Properties Trust, a Birmingham, Ala.-based REIT with 36,481 apartment units, announced major executive management changes this week that will bring the return of a familiar face to the CEO seat. The move, however, took no one by surprise.

Colonial, which ranked No. 21 on Multifamily Executive's 2008 list of Top 50 Owners, has asked chairman and former CEO and founder Thomas H. Lowder to return to his role as CEO. Current CEO C. Reynolds Thompson III will be reassigned as president and CFO. Weston M. Andress, who had served as president and CFO, is stepping down after being offered a one-year, $400,000 consulting contract and a lump-sum severance payment of $1.25 million, according to The Birmingham News.

"The Board of Trustees felt it would be in the best interest of our shareholders for me to take a more active role in the day-to-day operations of the company as we navigate the current economic environment," Lowder said in a statement. "We appreciate Weston for his significant contributions and dedication to our growth during the past five years and wish him well."

Analysts familiar with the restructuring were not surprised, saying that the REIT has struggled under mounting debt, a burdensome construction pipeline, and a battered stock price. On Jan. 2, Colonial's stock price was $6.82, down a whopping 67 percent from its price of $20.78 exactly one year earlier.

"Look at the series of problems the company has had, and I don't think it's surprising that the board would take a look at management and say, 'We need some changes here,'" says Stephen Swett, an analyst with Keefe, Bruyette & Woods, an investment banking and security brokerage firm based in New York.

Green Street Advisors, a Newport Beach, Calif.-based REIT consulting and research firm, recently reported that Colonial had a liquidity leverage ratio (the book value of debt divided by estimated asset value) of 66 percent. That ranked Colonial as having the highest greatest leverage in the sector, tied with Cleveland, Ohio-based Associated Estates.

"It appears their CFO took more of the blame because they're in more of a precarious liquidity situation," says Andrew J. McCulloch, senior analyst for Green Street.

Taylor Schimkat, senior associate for Green Street, believes the presence of Fannie Mae and Freddie Mac will help keep the company afloat, although the leverage does present challenges. "The REITs that have stretched balance sheets won't be able to take advantage of distressed opportunities," he says.

Lowder, who served as CEO of Colonial from July 1993 until April 2006, has been chairman since the company's formation in 1993. Thompson was promoted to CEO in April 2006 after serving as COO from September 1999 to April 2006. Andress had been Colonial's president and CFO since April 2006.