(Updates with comments from conference call)
By Nathalie Tadena
HCP Inc. (HCP) fired James Flaherty as its chief executive and chairman after a decade at the helm of the real estate investment trust, pointing to a loss in confidence in his leadership style amid a slew of executive turnover.
HCP, which is focused on the healthcare industry, named Jones Lang LaSalle Inc. (JLL) executive Lauralee Martin as its new CEO and said its board decided to separate the chairman and CEO roles to enhance its governance. It appointed lead director Michael McKee, who has been on the board for 26 years, as non-executive chairman.
"This is not about a new direction or a new strategy, but it's about leadership," Mr. McKee said of Mr. Flaherty's dismissal on a conference call with analysts.
Mr. Flaherty couldn't immediately be reached for comment and hasn't responded to an email query.
Mr. McKee said the board realized it had lost confidence in Mr. Flaherty's leadership and style over a number of months and said Ms. Martin "checked all the boxes" the board was looking for in a leader, particularly in regards to her relationship-building skills.
"I build teams that are high quality teams that can perform at a much higher level because we perform together," Ms. Martin said on the call.
Ms. Martin, who is 62 years old, becomes HCP's third CEO in its 28 years as a public company. However, HCP has seen a handful of management changes in recent years, including four chief financial officers and three general counsels since Mr. Flaherty became CEO in 2003.
Ms. Martin has 35 years of experience in real estate and has served on HCP's board for five years. Prior to her tenure at commercial real-estate-services firm Jones Lang LaSalle, where she most recently served as CEO of its Americas division, Ms. Martin held posts at Heller Financial Inc. and General Electric Co.'s (GE) credit arm. She will remain on HCP's board.
HCP has generally logged increased revenue in recent periods thanks in part to acquisitions and higher resident fees. Ms. Martin said HCP's business is strong and the company's "5x5" business model, in which it invests in five health care property types through five investment products, will remain the same.
"We felt that this was actually a good time to make a transition because of the current strength of the company," Mr. McKee added.
Mr. Flaherty, who was 55 as of the company's March proxy filing, will remain a member of the board and will receive a severance payment. Mr. Flaherty hasn't told HCP's board of his next plans, Mr. McKee said.
"Jay was a substantial and successful force behind HCP's considerable growth for more than a decade, and we wish him continued success," Mr. McKee said in a statement.
Ms. Martin joined Jones Lang LaSalle as chief financial officer in 2002 and was appointed to the additional post of chief operating officer in 2005. She gave up her COO responsibilities in January, and later her CFO responsibilities, to become the CEO of the Americas segment.
Separately, Jones Lang LaSalle said CEO Colin Dyer will assume direct oversight of the Americas region following her departure.
HCP--whose investments include senior housing, medical offices and skilled-nursing properties--also said Thursday that Kenneth Roath, the company's chairman emeritus and former CEO before it went public, plans to step down from the board. Mr. McKee noted Mr. Roath has been signaling to the board for some that he was preparing to retire.
In July, HCP reported its second-quarter profit rose 5.7% as it posted a bump in sales from its rental segment. However, a key industry metric, funds from operations, grew less than expected.
Shares were down 4.1% to $40.05 in recent trading. The stock is down 11% over the past three months.
Write to Nathalie Tadena at email@example.com
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(END) Dow Jones Newswires
October 03, 2013 12:39 ET (16:39 GMT)Copyright (c) 2013 Dow Jones & Company, Inc.
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