Warehouse REIT Prologis’ choice of treasurer Tim Arndt as its next CFO is part of a succession plan years in the making that also shines a light on the critical role board experience can play in a financial executive’s career advancement.
Arndt, 49, has been with the company since 2004, working in a range of roles in addition to treasurer, including head of corporate planning and in the company’s global deployment team. Effective April 1, Arndt will succeed outgoing CFO Tom Olinger, 55, who will be retiring but will stay with the company through year-end as part of the transition.
Olinger said in an interview that Prologis identified Ardnt as a likely successor early as part of personal development and succession plans that are “foundational” to the company. As such, the company prepared Arndt for the job by giving him exposure to parts of the business, experience with internal and external customers, analysts, and shareholders and the board. Arndt estimated he’d attended about half the board meetings over the years “co-piloting” with Olinger and working with the board on such issues as the annual plan.
With that groundwork of experience, Arndt became the clear choice for the company and board, Olinger said. “In Tim’s various roles he had quite a bit of exposure to the board and to senior management so he was very much a known quantity,” Olinger said. “Everybody was in lock step that Tim was the right individual.”
Arndt will inherit the financial reigns of the massive warehouse landlord, which has a market cap of more than $100 billion and a portfolio sized at 1 billion square feet in 19 countries.
The company has benefited from soaring demand for warehouse space stoked by the supply chain crunch. Amazon remains Prologis' top customer, with more than double the square footage of its second-largest customer, Geodis, and the market is also seeing new tenants compete for real estate, especially in the e-commerce space.
In his new role Arndt will oversee a finance team of about 300 people. He will be focusing on helping to grow the company’s non-real estate business, which includes providing services and products such as solar energy that it produces from installations on about 10% of its portfolio’s roofs. The so-called essentials business will seek to serve its customers' operational, workforce, energy, technology and transportation needs. It's expected to generate about $75 million in revenue this year, but the company sees it as having the potential to be a $1 billion business over time. “A big component of that is the energy…. I would say there’s a huge opportunity there," Arndt said.
As the company looks to the new business models Arndt will focus on the financial systems and structures around those new initiatives. “We just need to round out new playbooks there,” he said.
He’ll be focusing on developing the same kind of underwriting and financing structures that the company already has in its core real estate business, to which he doesn't plan to make big changes.
"There's room for some small improvements and enhancements but nothing material at all," he said.