So why does a successful CEO of a healthcare REIT leave to become the chief investment officer of a larger REIT? Since Justin Hutchens arrived at National Health Investors (NHI) in 2009, the REIT has posted positive returns in every year from 2010 on, including three years with total returns between 28.1% and 34.5%. And in 2010 it was the number one performing healthcare REIT. While we could joke that he yearned to return to the West Coast, the real reason had to be what his new employer, HCP, Inc., had to offer. He will be in charge of all the seniors housing and care portfolio, which is the majority of HCP and alone dwarfs the total NHI portfolio. Bottom line, it is a much bigger playing field for Justin. But that alone would not be reason enough. He is one of the few REIT executives (in particular, REIT CEOs), with operating experience, having been the COO of Emeritus. Which leads us to two possible conclusions (well, maybe three).
First, with HCR ManorCare having some issues, it is important to have someone with a strong operating background at HCP to get involved. Second, with Brookdale Senior Living also having its “issues” with the integration of Emeritus, and Brookdale is a billion-dollar plus tenant and partner with HCP, Justin certainly knows a good portion of that company. And going forward with healthcare REITs, a senior executive or CEO with a very strong operations background could be very important. Still, it is highly unusual for a CEO of a NYSE company (NHI) to take a lesser title at a larger rival (HCP), even though the portfolio is much larger. One would have to think that as part of the “unwritten” deal to move to HCP there would be the possibility to succeed Lauralee Martin as CEO in a year or two (she is 64 years old, not that we are ageist or anything). The other possibility is that HCP, with its recently expanded relationship with Brookdale, may be looking to expand it further despite the occupancy and staffing woes at Brookdale. And if so, who better than Justin to steer that process, if there is a process. Here we go again….