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In 2025, senior living REITs are growing ever larger, and with each new investment they are expanding a “utopian” vision for the future.
During Welltower’s (NYSE: WELL) second-quarter earnings call earlier this week, CEO Shankh Mitra laid out why he believes in “a world where everyone is fully aligned and all in to create an ultimate win-win equation.” Specifically, he believes that there are five common characteristics of a “well-designed incentive system” for senior living owners and operators. Such systems must be “simple,” “significant,” “non-gameable, either by payer or payee,” “earned as a team,” and “duration-matched.”
“I envision a future where these five pillars shape the incentive structure for everyone, from executive leadership and regional management throughout Welltower and our operating partners to critical caregivers and frontline servers in our communities,” Mitra said during the call.
Mitra added that “while I continue to be told that vision is utopian and perhaps even foolish, I am convinced that it is achievable if we make the resident and employee experience our highest priority.”
“This is why I believe the most important pillar is matching duration. We anticipate providing you more in this area as we begin to roll out our sixth generation of aligned partnership agreement incentive programs in the coming quarters,” he said.
As Senior Housing News reporter Austin Montgomery noted in June, senior living owners and operators are evolving their relationships in search of greater strategic alignment. Many major U.S. senior living REITs – including Welltower, Ventas (NYSE: VTR), National Health Investors (NYSE: NHI), LTC Properties (NYSE: LTC) and Omega Healthcare Investors (NYSE: OHI), and others – are either bulking up or seeking to grow their number of RIDEA management structures.
As they do so, some are deploying tech-forward support systems that operators can use to improve their operations.
While this is not a new trend in 2025, it is a philosophy that I believe will become increasingly common as REITs deploy their significant resources toward growth. And eventually the leaders of these companies may very well bring their pie-in-the-sky ideas into reality, if operators follow suit.
In this members-only SHN+ Update, I examine recent earnings calls from publicly traded companies and offer the following takeaways on:
- Inside the “utopian” vision for senior living alignment and how REITs are achieving it
- Limitations to these strategies and potential challenges
- REIT plans to further expand their investments in the senior living industry
REITs expand operator alignment strategies in 2025
Senior living REITs were once bigger fans of the triple-net lease structure. In the last couple of years, even companies that once resisted the management model in favor of more traditional leases, such as LTC Properties and NHI, have joined the RIDEA bandwagon.
Mitra and other REIT leaders hold a vision of the future where senior living operators can use tech and lean on their larger REIT partners to move the needle forward and add to NOI in the months and years to come.
As SHN has detailed before, REITs like Welltower and Ventas achieve this by deploying support systems underpinned by technology that give operators and owners more visibility on operating results. Using these systems, operators can benchmark their progress compared to other operators in their market, identify potential opportunities and pressure points and notice important financial patterns they can improve upon.
During Welltower’s second-quarter earnings call, Mitra said that expanding the company’s technology support platform, dubbed the Welltower Business System, is a constant priority for the company.
“As we continued to ramp up our investments in the Welltower Business System, we realized we need to think more boldly and more holistically about the technology ecosystem,” Mitra said. “Software and hardware at the site-level and enterprise-level at Welltower, with data architecture and innovation, all require the same level of focus, leadership and talent that we have invested in past decades in building our data science platform – and the fastest way to move the dial is to narrow our focus.”
While Mitra has historically focused on the data side of the offering, he said that the company’s management team has pushed him to further re-imagine what the tech can offer, and teased some “significant changes” on tap for the REIT in the next six to nine months.
“I see enormous potential in interconnecting many of the initiatives which are currently underway, as well as identifying new opportunities to explore next,” Mitra said during the call. He noted that the company plans to share more on these efforts in coming quarters.
Ventas has taken a similar strategy with its Ventas Operational Insights platform. The company has “complete respect” for the job that its operating partners do, according to Chief Investment Officer and Executive Vice President of Senior Housing Justin Hutchens.
Ventas supports its operating partners through a support suite that includes everything from help with digital marketing to maximizing occupancy and margins through surgically targeted rate increases.
“We have designed our approach to senior housing to be collaborative with operators and put the power of our platform to work assisting them with data analytics and operational insights, and ensuring that our communities are well-invested and well-positioned to be competitive,” Hutchens told SHN during an interview earlier this week. “By putting the power of the platform together with the focus and expertise of the operator, we believe we can deliver outsized performance.”
Push and pull of operations
Both Welltower and Ventas believe there is much more senior living occupancy and, accordingly, NOI upside ahead, which is why they are taking a narrower focus on their operating partners’ performance.
But there is a balance involved in that push-and-pull. Although REITs may own a community, that investment is near worthless without buy-in from their operating partner. Last year, 12 Oaks President Greg Puklicz told me that the company prefers to take a “holistic approach” with ownership and solve problems collaboratively. But he warned that “setting up a huge accounting office … to just crank out financial statements to communities across the country” is not a win-win approach, at least for operators.
Doing so “provides the data, but it doesn’t provide the connection and the effective use of that data to really manage communities,” he told me.
To their credit, Welltower or Ventas are providing more than just data access when they work with senior living operators. But I think Puklicz is right that these relationships must truly be win-win, and to me that is the real challenge. Although senior living REITs typically have a long-term view of the industry, what is good for a REIT is not necessarily good for an operator, and vice versa.
I also wonder if operators will develop more of this sophistication on their own, without a larger partner like a REIT. I think about companies like Trustwell Living, which built its own data platform that CEO Larry Cohen believes rivals what the REITs can do. Cohen is the former CEO of Capital Senior Living, the operator now known as Sonida Senior Living (NYSE: SNDA), and he’s long studied operational data for patterns that he can improve from a corporate office.
In the meantime, REITs including Ventas, Welltower and others are continuing to grow their senior housing operating portfolios in 2025, with an eye on building even more aligned management into their holdings.
Welltower is sitting on a $9.2 billion acquisition pipeline of “highly attractive” properties across all of its regions, including in the U.S. and abroad, Mitra noted.
Welltower’s investment pipeline this year already has eclipsed the company’s investment total for 2024, $6 billion. The company’s current investment pipeline totals are its highest-ever, in fact.
Ventas recently upped its investment guidance to $2 billion for the entirety of 2025, with plans for its SHOP segment to comprise half or more of its NOI by year’s end.
The bottom line to me is that, as these companies grow their operating segments, they will seek to further align ownership and operations. That will put pressure, both on REITs and operators, to find new and creative ways to work together in service of a larger goal.
