Seritage CEO Schall Leaves To Take Top Job At AvalonBay
Multifamily giant AvalonBay Communities has tapped the head of Sears' real estate spinoff to become its next chief executive.
The publicly traded apartment firm named Benjamin Schall, currently president and CEO of Seritage Growth Properties, its new president in a release Thursday. He will also join AvalonBay's board of directors.
Schall will take that title from AvalonBay Chairman, CEO and President Timothy Naughton next month, serving as the REIT's No. 2 until Naughton plans to retire at the end of 2021, when Schall will also succeed him as CEO.
Naughton, who has been AvalonBay CEO since 2012 and with the company and its predecessors since 1989, plans to retain his seat on the REIT's board of directors and become executive chairman.
Schall has led Seritage since it was formed by Sears Holdings in 2015 as a spinoff entity to sell and redevelop Sears or Kmart stores. Before that, he was chief operating officer of Rouse Properties beginning in 2012, overseeing a portfolio of 35 regional malls, and prior to that, Schall was senior vice president with Vornado Realty Trust, also a retail specialist.
AvalonBay agreed to pay Schall $7.5M per year in compensation through a mix of salary, bonuses and stock payments. As head of Seritage in 2019, he made a shade over $4M. He will step down from Seritage's board next month, the REIT said in a press release Thursday.
The move into multifamily represents a jump for Schall from a retail background during the 2010s. In a statement announcing the appointment, however, AvalonBay lauded Schall's talents as a CRE executive, stressing that he has "experience in multiple sectors, including office, retail and mixed-use across more than 40 states and 24 of the top 25 MSAs in the U.S."
In his five years at the helm of Seritage, Schall helped trim the company's portfolio of 266 former Sears and Kmart stores to 195, raising $1B through the sales, and launched redevelopment projects at many of its remaining properties.
AvalonBay declined to comment further on Schall's hiring. The Arlington, Virginia-based REIT has an ownership interest in 294 apartment communities containing 86,676 units, with 19 communities under development. Its properties are concentrated in major metros in the Northeast, mid-Atlantic, Pacific Northwest and northern and southern California. The company is aiming to expand into Southeast Florida and Denver.
Since the announcement of the appointment was made on Thursday, AvalonBay stock dropped from $165.51/share at the beginning of that day to $162/share as of mid-day Friday, but the downward trend might not have anything to do with the change in the C-suite. The REIT's stock started the week at $172.45/share and has been trending downward since.
AvalonBay, like most REITs, hasn't recovered its pre-pandemic stock value; on March 2, its shares traded for $209.67.
The company has been suffering from a drop in rent collections because of the current economic crisis. During Q3 2020, the REIT reported that for its established communities, total revenue decreased about $33.1M, or 6.1%, compared with Q3 2019. The company attributed $12.4M of the decrease to "uncollectible lease revenue." Its funds from operations for the third quarter decreased 9.8% compared with a year earlier.