Lauralee Martin Departs HCP, Michael McKee to Serve as Interim CEO

by Jeff Shaw

IRVINE, Calif. — Lauralee Martin has left her position as president and chief executive officer at seniors housing investor HCP (NYSE: HCP). Michael McKee, the company’s executive chairman, will take over the position until a permanent replacement can be found.

“Now is the appropriate time to advance the process of developing HCP’s next generation of leadership,” stated McKee in a press release. He did not elaborate further on the reason for Martin’s departure.

The company’s board of directors expects the search for a permanent CEO to take between three and six months.

“On behalf of the board and the company, I want to express our sincere gratitude to Lauralee for her many contributions to HCP, both as a member of our board since 2008 and during the last three years as CEO,” says David Henry, HCP’s lead independent director. “Lauralee’s energy, passion and dedication to HCP are much appreciated by all of us, and we wish her the very best in the years ahead.”

HCP made news in May when it became the second of the major seniors housing REITs (after Ventas) to spin off its skilled nursing portfolio into a separate company. That new company, consisting of HCP’s 320 HCR ManorCare properties, will be called SpinCo and is expected to go public before the end of the year. Following the spinoff, Mark Ordan, former CEO of Sunrise Senior Living, will take the reins as CEO of SpinCo.

The departure of Martin is the latest of many shakeups at HCP’s top level in the past 12 months.

In May, the company re-hired Tom Herzog as its CFO, a position he previously held from 2009 to 2011 before leaving for another company. That same month, the company hired former Holiday Retirement CEO Kai Hsiao as its executive vice president of asset management for the seniors housing division.

In August of last year, HCP wooed Justin Hutchens, the CEO of competing REIT National Health Investors, to serve as chief investment officer of the seniors housing division. In May of this year, Hutchens was promoted to be chief investment officer of the entire company.

At the same time that Hsiao was hired and Hutchens promoted, McKee was promoted to his current position. He was formerly an independent chairman and lead director with the company, and previously served as CEO of investment firm Bentall Kennedy U.S.

“I remain confident and excited about our recent C-suite appointments and the broader management team,” says McKee. “Our portfolio performance and business outlook are consistent with our plan across all investment sectors, and the spinoff of our HCR ManorCare portfolio remains on track to be completed later this year.”

HCP expects to record a severance charge of approximately 3 cents per diluted share in the third quarter of 2016 related to Martin’s departure. According to an SEC filing associated with her departure, Martin will continue to receive paychecks totaling $6 million over the course of two years.

Based in Irvine, HCP is the fourth-largest owner of seniors housing properties in the United States with 491 properties and 49,731 units, according to the 2015 numbers from the American Seniors Housing Association.

HCP has a market cap of approximately $16.8 billion, behind Welltower at $27 billion and Ventas at $25.4 billion, making it the third largest REIT in the seniors housing sector.

HCP’s stock price closed at $35.94 per share on Friday, July 8, down from $37.87 one year ago.

— Jeff Shaw

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