HCP Inc. (HCP:US), the largest U.S. health-care real estate investment trust by market value, said Lauralee Martin will become the third chief executive officer in its 28-year history, replacing James F. Flaherty.
Martin, 62, was most recently chief executive of the Americas division of brokerage Jones Lang LaSalle Inc. (JLL:US) and has been on HCP’s board for five years. Flaherty was fired as chairman, president and CEO and will remain a director, the Long Beach, California-based REIT said today in a statement. Michael D. McKee will serve as non-executive chairman.
“Lauralee is a very seasoned and effective leader,” McKee said on a conference call to discuss the management changes. “We had a wonderful chance to see her up-close and personal for a number of years and noted her contribution and her insight into the direction of the company.”
Flaherty, CEO since 2003, was terminated because the board lost confidence in his “leadership and his leadership style,” and not due to any issues related to HCP’s business or stock performance, McKee said on the call. The board will honor his contract, with severance pay, he said. The option to remove Flaherty from the board was “not available to us at this time,” McKee said.
HCP’s directors “don’t like his management style, which is a funny conclusion to come to 10 years down the road,” Richard Anderson, an analyst at BMO Capital Markets in New York, said in a telephone interview. “It sounded contradictory that they were so thrilled with how the company has progressed to this point, and then they fire the chairman and CEO. I don’t know if I’ve ever seen that before.”
HCP fell (HCP:US) 4.7 percent to $39.82. The stock has dropped 12 percent in the past year, compared with a 0.6 percent decline in a Bloomberg index of health-care REITs.
Martin is one of the highest-ranking females in commercial real estate, HCP said. She joined Chicago-based Jones Lang LaSalle in 2002 and previously held executive positions at Heller Financial Inc., a commercial-finance company, according to the statement.
With Martin taking over, the two largest health-care REITs by market value will be run by women. The second-biggest, Chicago-based Ventas Inc., is led by Debra Cafaro, the chairman and CEO. Martin would be at least the third woman to take over a REIT in the past year.
Wellington Denahan was named chairman and CEO of mortgage REIT Annaly Capital Management Inc. in November, and Marguerite Nader became CEO of Sam Zell’s Equity Lifestyle Properties Inc. earlier this year. When Nader took over at Equity Lifestyle, five of the 157 companies in the REIT indexes compiled by Bloomberg were run by women.
HCP’s management changes were “abrupt” and the transition is “likely a work in progress,” Michael Carroll, an analyst at RBC Capital Markets in Solon, Ohio, said in a research note today. Carroll cut his rating on HCP shares to underperform, RBC’s lowest stock rating, from sector perform.
Flaherty “was widely considered a cornerstone” of HCP’s successful investment strategies, Carroll wrote. “This was one of the main reasons the company traded at a premium in the space, and we expect that premium to erode until investors can better assess the new leadership.”
Jones Lang CEO Colin Dyer will assume Martin’s duties at the brokerage, the company said in a separate statement today. Kenneth B. Roath, chairman emeritus of HCP and the REIT’s first president before it went public, will step down from the board, HCP also said today.
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