Bill Ferguson, co-chairman and CEO of Ferguson Partners, and Mike Cordingley, who leads Ferguson’s North American Management Consulting and Leadership Consulting Business Units, were guests on Nareit’s REIT Report podcast. Ferguson and Cordingley discussed their latest research into REIT CEO succession trends and shared best practices for transition planning.
“Succession is, if not the highest priority for the board, one of the highest priorities,” Ferguson said. He noted that there were seven CEO succession events per year from 2013 to 2022. In 2023, there were nine and in 2024 that increased to 12.
Cordingley noted that the acceleration is set to continue for a number of reasons, including increasing activist involvement and an aging leadership cohort. “The average age per REIT CEO is 60 and typical retirement is occurring around 64,” he said.
Ferguson Partners’ research shows that about 48% of internal CEO promotions over the last three years have been former CFOs, while around 35% of internal promotions in that same time have been former COOs.
During the last 10 years, almost 85% of CEO successors have come from the real estate industry, Ferguson noted. “We are a highly networked business where relationships matter and most boards don't want to take the risk of bringing somebody in from another industry,” he said.
Historically, the REIT industry has not invested as heavily as others in leadership development, according to Ferguson. “We expect that more intentional leadership development will likely be the reality as more REITs are looking to build that internal succession pipeline for upcoming CFOs and COOs,” he said.
Other topics discussed in the interview include:
- Internal versus external CEO succession candidates, and the reasons for both
- Whether REITs should share their succession plans publicly
- The most constructive steps a board can take to ensure a smooth, successful transition