The company has retained an executive search firm and formed an internal committee of the board to find a new CEO, following the unexpected death of Hal Pote, president and CEO, on June 26. During a conference call, Lewis Ranieri, non-executive chairman of the board, called the company's "continued positive trajectory over the past four quarters" a testimony to Pote's leadership.
Meanwhile, a trio of principals, consisting of Glenn Blumenthal, COO; Edward Matey, general counsel, and David Nettina, CFO and chief real estate officer, operate as an interim office of the president. Although Pote's contract did not call for compensation in the event of his death, the board has approved a one-time payment of $5 million to his estate, following a review of his contributions and a study of appropriate levels of compensation for deceased CEOs.
Properties in the locally based specialty financial REIT's core portfolio, Blumenthal said, reached 90.7% by June 30. Two assets previously listed on the company's top 10 vacancy list, Blair Mill near Philadelphia and North Wakefield in Newark, DE, are now fully leased.
Assets held for sale have an average occupancy of 57.8%. During the quarter, the company sold 18 properties, reducing the portfolio to just shy of 1.1 million sf, of which 174,000 sf were vacant. Of the 193 properties now held for sale, 53 are under contract and 26 are out for signatures. Blumenthal said he anticipates at least $100 million from dispositions in third-quarter and at least the same in this year's final quarter.
General and administrative costs decreased $4.6 million during the quarter. Nettina said among the efforts to drive profitability in the portfolio "was a $2.9-million, or 30%, reduction in our property and casualty insurance program." He also said the company is moving forward to develop JV opportunities "in order to more efficiently deploy our capital."
AFR also shed $186 million in mortgage debt during the quarter. It has achieved a leverage ratio of 63% to net assets, which is better than the targeted 65% ratio.
By midday following the conference call--as the NYSE composite registered a 111-point loss--shares of AFR had lifted to $8.53 a share, up from a new 52-week low $7.99 a share. This compares with a 52-week high of $12.25 a share, reached on Sept. 15, 2006.
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