Welltower’s DeRosa Extends CEO Contract, CIO Brinker Exits

An executive shuffle is underway at one of the largest health care real estate investment trusts (REITs) currently active in the medical office space: Welltower (NYSE: HCN).

Specifically, Thomas DeRosa is set to remain CEO of the Toledo, Ohio-based health care REIT through April 2020, while Chief Investment Officer Scott Brinker will leave the company effective Jan. 3.

Welltower owned 259 outpatient medical properties as of Sept. 30, 2016, according to a company filing with the U.S. Securities and Exchange Commission dated Nov. 2, 2016. All together, the REIT owns more than 1,400 post-acute care, senior housing and outpatient medical properties in the United States, U.K. and Canada.

The CIO role will be eliminated entirely following Brinker’s departure, according to a press release issued Tuesday. Brinker, who joined the company in 2001, earned his undergraduate degree from Yale University in 1999 and an MBA from the University of Michigan in 2010.

Welltower’s strategy under DeRosa’s leadership has delivered “strong financial and operating results, created a dramatic improvement in the company’s balance sheet, and increased our enterprise value to over $40 billion,” Jeffrey Donahue, non-executive board chairman, said in the press release.

“At the same time, Tom has also emerged as a global voice advocating for how effective, modern real estate settings can promote wellness and contribute to improved outcomes for providers and payors,” Donahue added.

Under DeRosa’s leadership, the former Health Care REIT has rebranded as Welltower and embarked on a major portfolio repositioning initiative. The company planned to dispose of $4.1 billion worth of properties in 2016, and just completed a major sale of skilled nursing assets.

The company’s COO, Jeffrey Miller, is planning to retire on Feb. 1. The role of COO will be eliminated from the organization following Miller’s departure.

Brinker and Miller have made “significant contributions” to Welltower’s growth and success to date, the company stated in its press release.

DeRosa’s contract extension is good news for Welltower, according to some analysts. In fact, the move provides “a dose of certainty that there will be continuity at the top and that Mr. DeRosa will continue what has been a mostly favorable tenure as CEO,” Michael Knott, managing partner at Green Street Advisors, said in a comment note.

It’s surprising, however, that Welltower is eliminating the CIO position and “parting ways with one of the best and brightest in the industry” in Brinker, given that the REIT “seeks to allocate capital for a living,” Knott said. Like Irvine, California-based HCP, Inc. (NYSE: HCP), Welltower is now tasked with proving that a “CIO by committee” model can work successfully, he noted.

Additional Changes

Welltower also unveiled several other leadership changes on Tuesday, most of which are effective immediately.

Welltower Executive Vice President Mercedes Kerr, who previously led the REIT’s business development activities in the U.S., will now take on added responsibility for deal origination on a global basis, including the company’s operations and portfolio in the U.K. and Canada. Additionally, Kerr will oversee an asset management function responsible for driving operating efficiencies across the REIT’s portfolio.

Tim Lordan, meanwhile, has been bumped to the freshly created position of senior vice president – asset management, and will now report to Kerr.

Welltower EVP and CFO Scott Estes will continue to lead the REIT’s corporate finance and investor relations, as well as portfolio risk management. Estes will now have additional responsibilities for information management, but Accounting, Tax and Corporate Communications will still report to Estes.

Senior Vice President – Finance and Investments Shankh Mitra will now assume additional responsibilities for oversight of the company’s business analytics and portfolio management functions, reporting directly to Estes.

Senior Vice President – Human Capital Christy Stone will continue to head the REIT’s human capital function, Senior Vice President – Underwriting Justin Skiver will now head the company’s underwriting function, and Matthew McQueen, senior vice president and general counsel, will continue to lead legal and enterprise risk management and will assume additional responsibilities for internal audit.

Written by Mary Kate Nelson

Photo credit: ‘The Leadership Series’ by Senior Housing News