An unexpected announcement by Welltower that CEO Tom DeRosa stepped down with COO Shankh Mitra named as his replacement.

I was not the only one surprised by Welltower’s announcement that CEO Tom DeRosa was stepping down effective immediately. My cell phone was buzzing Monday night with questions, mostly centered around why. Whatever the reason, we wish him well.

No one was surprised, however, that COO, Vice Chair and Chief Investment Officer Shankh Mitra has been named as CEO, but will retain his CIO role. He has been spearheading the REIT’s portfolio realignment the past two years, a process that has given Welltower $2.2 billion of cash on its balance sheet and a revolver with $3.0 billion that is not drawn. Talk about dry powder. I just found out Shankh was born the year I graduated from business school. Hmmm.

But he will have his work cut out for him, with the SHOP portfolio occupancy now down 720 basis points since the end of February to 78.4%, and the seniors housing triple net lease portfolio operating at a 1.04x EBITDAR coverage. Lucky there is that 5% management fee buffer.

But as long as he can sell properties and portfolios in this market at cap rates of 4% and 5%, and sometimes lower on in-place cash flow, well, we suspect he will have a nice arbitrage come next year when Welltower loads its dry powder and goes on the attack. I can’t wait.