- Oakes not entitled to severance, shopping center landlord says
- REIT names Thomas August as CEO, effective immediately
DDR Corp. abruptly terminated its chief executive officer, David Oakes, after less than two years at the helm of the U.S. shopping center landlord.
Oakes, who was also interim chief financial officer, won’t be entitled to receive any severance payment, according to a regulatory filing Monday. Thomas August will become CEO, effective immediately, the real estate investment trust said in a statement.
“Mr. Oakes’ termination was not related to the company’s financial or operating results or to any disagreements or concerns regarding the company’s financial or reporting practices,” Beachwood, Ohio-based DDR said in the statement.
Oakes joined DDR in 2007 and became president and CFO of the company in January 2013. He was named CEO in February 2015. He would have received $2.4 million in cash severance if he were terminated without cause, according to a filing in March, which listed his age as 38.
“We think it was more personal in nature,” SunTrust Robinson Humphrey Inc. analysts led by Ki Bin Kim said in a note to clients after reaching out to the company for more information. “The event in question happened within the past week and was serious enough in nature to warrant the dismissal.”
As of now, the company doesn’t expect litigation or settlement costs, the analysts wrote.
The shares rose 2.7 percent to $19.18 at 1:41 p.m. New York time. They have gained 21 percent in the past 12 months.
August is currently chairman of DCT Industrial Trust Inc. He was president and CEO of Equity Office Property Trust, an arm of Blackstone Group LP, from July 2010 through the end of 2015.
DDR also said it will continue its search for a permanent CFO and appointed Christa Vesy, the REIT’s chief accounting officer, to fill the job in the interim.
The sudden changes in leadership prompted Mizuho Securities USA Inc. analysts led by Haendel St. Juste to downgrade DDR’s shares to underperform from neutral.
“You’re retooling the entire senior management,” St. Juste said in an interview, noting that such a change could mean a shift in the company’s strategy. “The stock has a little more risk than average for the near term.”
While there’s some uncertainty now, “there’s nothing fundamentally wrong with the company,” he said. “The balance sheet and the portfolio are in good shape.”
Investors also may be sensing a greater chance that DDR could be a candidate for a buyout under August’s leadership, given his experience with Blackstone, the world’s biggest private equity real estate investor, St. Juste said.
DDR owns and manages 349 shopping centers, with about 113 million square feet (10.5 million square meters) in 37 U.S states and Puerto Rico.