Instant Analysis: HCP Names a New CEO

What happened

There's a new CEO at specialty real estate investment trust HCP (NYSE: HCP). The company's board of directors elected Tom Herzog to be the Chief Executive Officer, effective this past January 1. Herzog replaces Michael McKee, who was named interim CEO last July.


Herzog will also hold a seat on the board of the REIT, which focuses on providing senior housing.

He is a familiar presence in HCP's C-suite. He joined the company last June as its Chief Financial Officer, having previously served in the same position at residential REIT,United Dominion Realty Trust, from early 2013 until then. United Dominion is no small fry either -- it's market cap is just under $10 billion, which makes Herzog's previous experience there all the more impressive.

HCP said it has retained executive search companyKorn Ferry to assist it in the search for a replacement CFO.

Does it matter?

Selecting a new CEO from its own executive team and one with years of REIT experience to boot indicates that HCP will stick to its current business strategy.

That's a positive development, in my view, as HCP has historically been a good performer. These days, it's a leaner and more focused company thanks to last October's divestment of the volatile unit now trading separately as Quality Care Properties.

Some investors might be concerned about the REIT's share price, which has dipped by nearly 7% over the past few months. I believe, however, that much of this is due to worries about rising interest rates, which increase the costs of funding for REITs and theoretically make rival assets like bonds comparatively more attractive.

Yet HCP operates in a field that is almost certain to grow robustly, as both the overall number of seniors and their proportion to the general population are forecast to rise significantly.

The appointment of Herzog signals business as usual for HCP. Hence, we can consider it a good and sensible move by the company.

10 stocks we like better than HCP When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and HCP wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 4, 2017

Eric Volkman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.