Just a week after Birmingham, Ala.-based multifamily REIT Colonial Property Trust announced the return of its chairman to the CEO helm, Atlanta-based Lane Co. likewise said that chairman and company founder George Lane will return as CEO, replacing current chief Bill Donges, who will assume an executive advisory role for a period of three to four months. Lane senior vice president and chief information officer Dan Haefner is also departing the company to head up Duluth, Ga.-based SALES Inc!, a multifamily leasing services company.
According to Donges, tight capital markets and a shrinking development pipeline were key factors necessitating the executive restructuring at Lane, which saw development activity fall from 37 deals and $1.7 billion under contract in 2007 and 2008 to only about five deals in the works today.
"As the total revenue base of your new developments and acquisitions shrink, and you've got less deals, there are fewer scenarios to confront," Donges says. "The bottom line is that you don't need the big executive team that you did in the growth phase. Dan and I were certainly not excess, but at some point you need to match the executive team to what the capital markets are allowing."
In a statement, both Lane and Donges emphasized that Lane remains strong in its core property management and asset management businesses and will continue to pursue acquisitions and new development. Donges, however, separately commented that development deals in 2009 would likely be few and far between.
Both principals also emphasized the amicability of the restructuring. "Bill's done a great job shepherding us through a strong period of growth," Lane said in the statement. "But unfortunately the real estate market is in a deep contraction. While we want him to be free to pursue other opportunities, we are asking him to stay on as an advisor, and to continue to represent us as our ambassador to the real estate community as a whole, including the national trade associations."
Donges says the advisory role is for an indefinite period of time, but the departing CEO expects to have surrendered most of his responsibilities within two to three months. "You don't want two chiefs walking around camp with headdresses on, or you might catch an arrow," Donges says.
Haefner will join SALES Inc! effective February 2 and characterizes his departure from Lane as bittersweet. "I would have been with Lane 10 years in April," Haefner says. "Bill and George have been good to me, and I'll miss the day-to-day interaction, but it is exciting to go and try something new."