Prime Retail Inc. confirmed yesterday that its president and chief operating officer would leave his post to lead a new online shopping company the Baltimore-based outlet center mall company plans to launch in March.
In taking the helm of primeoutlets.com, which the real estate investment trust intends to spin off into a separate company by mid-2000, William H. Carpenter Jr. will leave a company he helped found more than a decade ago.
Carpenter will be replaced by Glenn D. Reschke, the brother of Prime Retail's chairman and an executive vice president of the REIT, responsible for development and acquisitions. As president, Reschke will be in charge of leasing, marketing, operations, management, development and construction of Prime Retail's centers.
Carpenter's move and Reschke's promotion comes after Prime Retail struggled to obtain capital for new projects. The company has had to curtail its development plans significantly.
"As we evolve from a company focused on development to one focused on property management, I think Glenn has the proper skill set to fit that," said Abraham Rosenthal, Prime Retail's chief executive officer. "He's very methodical, organized, and tenant focused. Bill's talent is in creating things, and that's why he's perfect for this."
Carpenter said primeoutlets.com represents a "natural extension of our existing business."
He had declined to discuss any shift late last month, when The Sun reported that he would move to the new venture.
"The Internet is forcing companies to think about whole new ways to touch the customer," Carpenter said. "This will just be another channel of distribution."
Carpenter said primeoutlets.com will move out of Prime Retail's 100 E. Pratt St. headquarters and lease office space in downtown. The new company, which will have an estimated 40 employees when the Web site begins to handle transactions, hopes to complete an initial public offering by June, he said. By law, REITs are prohibited from owning operating companies such as primeoutlets.com.
Primeoutlets.com will likely offer shopping from 15 merchants, said Anya T. Harris, a Prime Retail senior vice president who has been named the online shopping company's chief operating officer.
Prime Retail is spending $15 million to launch the online shopping company, funds the REIT expects to be paid back after primeoutlets.com's IPO.
Unlike many e-commerce ventures, primeoutlets.com expects to "break even" by the end of 2003, Harris said. The new company hopes to generate sales of $3 billion by 2005.
In establishing an online shopping company, Prime Retail is hoping to leverage the 120 million customer visits it receives each year to its 51 projects in 26 states. But challenges remain, including how and from where primeoutlets.com will distribute its goods.
Still, analysts said Prime Retail may have the power to succeed. Other factory outlet mall owners, including Tanger Factory Stores Inc. and Konover Property Trust, are also working on online shopping plans.
"Clearly they have the tools to do it if anyone in the sector can," said David M. Fick, a principal and vice president at investment firm Legg Mason Wood Walker Inc.