REIT lets temporary leader keep post

Prime Retail board names Reschke permanent CEO

Real estate

July 26, 2000|By Rona Kobell | Rona Kobell,SUN STAFF

Prime Retail Inc. announced yesterday that interim Chief Executive Officer Glenn D. Reschke will keep the job permanently.

The board of the beleaguered Baltimore outlet center owner also unanimously elected Reschke chairman, adding to his previously held title of president.

Prime Retail, which owns, manages and develops outlet malls, has faced mounting debt and troubling occupancy rates, prompting analysts to warn that the company is flirting with bankruptcy. Because of its cash crunch, the real estate investment trust also announced that it was suspending its dividend on preferred stock for the rest of 2000, a move predicted by analysts last month.

Reschke said he appreciated the board's vote of confidence, but warned that "there are no quick fixes" for Prime Retail's debt woes.

At the time of the announcement, Reschke was in New York talking with executives of Lehman Bros. Inc. The Wall Street firm is lending Prime Retail $110 million after agreeing last month to serve as Prime Retail's financial adviser in an effort to help the company avoid bankruptcy. Reschke called the Lehman loan "a key first step" to restoring the company's financial health, which he said was endangered by frittering away "precious equity" on new ventures, such as scrapped plans for eOutlets.com, an Internet mall, plus a chain of retail stores.

Reschke, 49, had worked with the Prime Group, Prime Retail's predecessor, in Chicago before moving to Baltimore in 1993 to help take the outlet company public. He is the brother of Michael W. Reschke, one of Prime Retail's founders.

Named president

Glenn Reschke became president and chief operating officer in September when William H. Carpenter Jr. left to head eOutlets.com. The company, which has 52 outlet centers, abandoned the venture months later, saying it could not find outside investors for the project.

When co-founder Abraham Rosenthal resigned from his chief executive officer post in February, Reschke was named acting CEO.

Wall Street seems to yawn

Wall Street seemed to yawn at news of Reschke's appointment yesterday. Shares closed at $1.38 yesterday, up 6 cents.

Robert F. Norfleet, a first vice president at Davenport and Co. in Richmond, Va., said he expected both Reschke's appointment and the dividend suspension.

"I think some people would have been a little more excited to have someone from the outside come in," he said, adding that Reschke "is more an insider than an outsider."

Norfleet sees the infusion from Lehman Bros. as a stop-gap measure and warned that Prime Retail will continue to founder if its balance sheet remains over-leveraged and it takes its focus off liquidity.

"If anything, it's a small step towards any kind of resolution," Norfleet said of Reschke's appointment. "You don't need someone with outlet mall experience. You need someone who can take a broken entity and fix it. I mean, it's Business 101."

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