Following the announcement earlier this week that Thomas DeRosa is stepping down as Welltower’s CEO, several analysts noted that although the timing of the announcement was unexpected, the choice for his replacement, Shankh Mitra, was not.
Mitra had been serving as vice chair, chief operating officer and chief investment officer of the real estate investment trust.
“While Mr. DeRosa will be missed, he is leaving the company in capable hands,” said a team of advisors at Green Street in a note to investors. “Mr. Mitra is well known among real estate investment trust investors, having played a prominent role at Welltower since joining the company in 2016.”
Green Street also noted that Welltower’s corporate governance profile likely will improve as a result of this transition, as the chairman and CEO roles will now be split.
Much of the surprise stems from the fact that DeRosa signed a new three-year employment contract with Welltower in April. In a note to investors, BMO Capital analyst John Kim speculated that the sudden departure of DeRosa indicates “disappointing earnings ahead, or a potential shift in strategy.” Kim is positive, however, on the company’s update on asset sales and third quarter operations, which showed “attractive pricing despite weakening fundamentals.”
But Steven Valiquette, a healthcare services analyst at Barclays, pointed to DeRosa’s age, 62, as a possible factor in this week’s change. Valiquette also suggested that the REIT’s positive operational updates also provided this week, which included the sale of $902 million in seniors housing assets, suggest that the management changes are not prompted by unexpected further deterioration in operations.
“Mr. Mitra has been a key contributor to Welltower’s strategic vision and capital allocation decisions since joining the company,” according to Green Street. “As a result, investors shouldn’t expect much to change on those fronts looking forward.”