Investors are watching Welltower Inc. uneasily after the departure of two prominent executives from the real estate investment trust in 2017.

The Toledo, Ohio-based company said Oct. 3 that CFO Scott Estes was leaving after more than 11 years in the post — and less than four months after signing a new employment agreement. His exit follows that of former Chief Investment Officer Scott Brinker, whose job Welltower eliminated in January, and whom the company is now suing.

Welltower, the largest healthcare property-focused REIT by market capitalization and a member of the S&P 500, said Estes is leaving to explore other opportunities. John Goodey, who previously led the company's U.K. and Canada operations, was named CFO, and company executive Shankh Mitra will assume the role of senior vice president of investments in January 2018.

Analysts and investors viewed the moves as a further turn by CEO Tom DeRosa away from the regime of his predecessor, George Chapman, who retired in 2014. CEOs often install their own leadership teams after taking over, and some investors are watching closely to see if personnel changes signal a broader strategic shift at the company.

Some investors have felt "a sense of anxiety" in recent months that Estes would leave, Mizuho Securities USA Inc. analyst Richard Anderson said in a note. Anderson described Estes as a "steady voice" in a long period of growth.

An investor who tracks the healthcare real estate sector for a large firm and who spoke on the condition of anonymity echoed those concerns, adding that while strategic adjustments can be beneficial, Welltower's future direction after an apparent "change in culture" is unclear.

Analysts with Raymond James downplayed the change at the top, citing Welltower's "deep management bench."

In an interview, Welltower Vice President for finance and investments Tim McHugh said Estes and the company mutually agreed he would leave. While employment agreements for Estes and executive vice president Mercedes Kerr were renewed over the summer to make their terms consistent with changes made to other executives' contracts, they were not extended at that time, he noted. Estes could not be reached for comment.

McHugh highlighted Goodey's strengths in communicating with investors and in overseeing property-level operations and asset management. He noted that in recent years the company has increased the relative size of its seniors housing operating portfolio, in which it maintains a stake in the performance of properties it owns, and said Goodey should be particularly adept at explaining that part of the business.

Leadership changes and a lawsuit

After a decade during which the top healthcare REITs took advantage of their low cost of capital to acquire privately owned assets at a rapid clip, the industry more recently has entered a new phase, McHugh argued. In part because many properties are more expensive and in part because companies are larger, Welltower cannot rely as much on external acquisitions for growth and must focus more on internal growth through asset management, he said.

The changes at Welltower, though, go beyond investment strategy. Addressing a question during a February earnings conference call regarding Welltower's lack of a chief investment officer after Brinker's departure, DeRosa was characteristically blunt.

"When I stepped into this role a little under three years ago, I inherited a bloated inverted-pyramid organizational structure," he said. "Since then … we got it to a rectangle. And as of Jan. 3, we get it to a functional pyramid."

Jan. 3 was the day the company renewed DeRosa's contract and eliminated Brinker's job. Brinker's subsequent decision to accept a similar position at HCP Inc. in early 2018 — after his noncompete period expires — drew a lawsuit from Welltower.

The suit alleges that Brinker took confidential information from the company and violated his separation agreement. It refers to HCP, which is not named as a defendant, as a "co-conspirator."

Both HCP and Brinker vehemently denied the charges, and Brinker argued in a counterclaim that DeRosa and Welltower, upset that he had landed on his feet, disparaged him to ruin his reputation in the close-knit healthcare real estate community.

As the matter moves toward trial, inquiries related to the lawsuit have sprawled to include major players in healthcare, real estate and finance. According to court records, Goldman Sachs Group Inc., Barclays Plc and a Public Storage unit are among the outside companies that received subpoenas demanding records of their communications with Brinker, and top executives at other real estate and healthcare companies — including Physicians Realty Trust, a REIT, and Sunrise Senior Living LLC, a major Welltower tenant — have been called to testify in depositions.

Goldman Sachs and Public Storage declined to comment. Barclays did not respond to a request for comment. Physicians Realty Trust CEO John Thomas, who traveled to Toledo to give a deposition, said his company is not a party to the lawsuit and otherwise declined to comment.

An office in New York

In another change, Welltower said Sept. 20 that it donated its headquarters to the University of Toledo and will lease back space for its employees. The move fueled speculation that the REIT's top executives could move to a planned new office in New York City, but McHugh said they will remain in Toledo, with the office in New York — like company counterparts in London, Toronto and Los Angeles — serving as a regional hub.

Giving up ownership of the Toledo campus will help the company shrink its general and administrative expenses, as it has done throughout DeRosa's tenure as CEO, he added.

"There certainly is a lot of change at the company," he said, adding: "Changes are being done for what management believes are the right reasons, and we hope performance and metrics continue to reflect that."

The investor who expressed trepidation over Estes' departure called some of the company's more recent investment ideas "very valid points." As for his take on the company as a whole, he said: "I still think it's a big to-be-determined."