Gary Shiffman, the long-serving CEO of Sun Communities, one of the largest publicly traded real estate investment trusts (REITs) in the U.S. with a valuation of $17 billion, has announced his decision to step down from his executive role after decades of leadership. His retirement comes just weeks after activist short-seller Blue Orca published a report raising questions about the company’s governance, alleging undisclosed dealings involving Shiffman and his family, which has cast a shadow over Sun Communities’ transparency and business practices.
Shiffman’s involvement with Sun Communities dates back to 1975, when he helped establish the company’s predecessor. Under his guidance, the company went public in 1993 and evolved into a major player in the REIT sector, focusing on manufactured housing communities and RV resorts. Today, Sun Communities operates more than 600 properties across North America, with a portfolio that has expanded significantly under his stewardship.
However, Shiffman’s retirement announcement follows a report from Blue Orca in late September, alleging undisclosed financial relationships between Shiffman and family members of board members. One such relationship involves Brian Hermelin, who serves as chair of Sun Communities’ compensation committee and is reportedly Shiffman’s step-cousin. The report claims that these connections were not disclosed to shareholders, raising concerns about the adequacy of oversight and whether proper conflict-of-interest protocols were in place. This has brought increased scrutiny on Sun Communities, especially regarding its governance and transparency practices.
While Sun Communities has not yet directly addressed the specific allegations from Blue Orca, a recent filing with the Securities and Exchange Commission revealed that Shiffman had informed the board of his decision to retire. Despite stepping down as CEO, Shiffman will remain on the company’s board of directors, ensuring a phased transition while the search for his successor takes place.
As Shiffman’s departure approaches, Sun Communities is facing heightened scrutiny over its governance practices. Investors will be watching closely, as the leadership transition and the company’s response to the allegations could impact perceptions of stability and trust within the firm. The coming months will be pivotal for Sun Communities as it navigates the challenges of ensuring a smooth leadership change and addressing concerns about governance, which are increasingly under the microscope in the REIT industry. How the company handles these issues will likely shape its future trajectory and reputation in the eyes of investors, regulators, and shareholders alike.