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Welltower held its fourth-quarter earnings call earlier this week, and a comment from CEO Shankh Mitra caught my ear.
During the call, he acknowledged that “several health care REITs and private funds” other than Welltower are assembling senior housing operating portfolios (SHOP), and warned that such deals are not always an easy win. Mitra was referring to the recent wave of other senior housing REITs creating SHOP segments in an effort to seek greater alignment with operating partners.
While he acknowledged that “these are capable organizations,” his personal opinion is also that at least some of them will come to “appreciate that writing credit checks is very different from owning equity in a complex and operationally intensive business that cannot be addressed simply by hiring a few asset managers to manage the managers.”
In a nutshell, Mitra believes that senior living operators must have the infrastructure to support growing operating platforms. It’s a lesson he’s learned from experience, having helped lead the company to pivot from a majority triple-net portfolio to one weighed heavily toward SHOP since its “re-founding” a decade ago.
“These are full-cycle lessons and will be learned as such,” Mitra said. “Exposure alone does not define success in this challenging terrain.”
As Mitra noted, multiple REITs and other companies are in 2026 jumping into the SHOP pool. It’s no secret starting a SHOP segment is not as easy as just buying properties and pairing them with operators, and companies that don’t heed those lessons may find themselves overexposed if things don’t go as planned.
In this members-only SHN+ Update, I analyze Mitra’s recent words of warning and last few years of RIDEA growth among REITs to offer the following takeaways:
- The lessons Welltower learned about SHOP in the last 10 years
- Why RIDEA hinges on infrastructure and support
- Where I think other companies could misstep in their SHOP strategies
Mitra’s warning informed by decade of RIDEA growth
Behind Mitra’s words of warning is a history of hammering out new and better RIDEA agreements with operating partners.
About a decade ago, the REIT rebranded from Health Care REIT to Welltower. While the company had already in 2010 inked its first first RIDEA contract with Merrill Gardens as operating partner, the company’s real evolution didn’t begin until the years between 2016 and 2020.
More than a decade ago, “misaligned incentives due to revenue-based management contracts” gave property owners “limited flexibility and optionality, given highly restrictive termination rights,” Welltower management wrote in a 2025 business update. Between 2015 and 2020, Welltower hammered out multiple RIDEA iterations to increase alignment with its operating partners. Now, the company is on its 6.0 RIDEA iteration.
Throughout the years, Welltower has tweaked its RIDEA structure to increase alignment with its operating partners. Today, the company blends real estate – what management calls its “hardware – with operational and technological capabilities, which management calls its “software.”
Underpinning Welltower’s RIDEA structure is a slate of support for operating partners that includes data insights and uses machine learning to help make better capital allocation and operating platform decisions. The REIT also has sought to increase alignment between itself and operators through programs like the Welltower Fellowship Grant it launched late last year, which awards frontline employees at the company’s top-performing communities with shares from a pool worth millions of dollars.
Mitra has said before the REIT is like Home Depot, Amazon and Costco in that it can use data and scale to improve performance on the ground and grow its “network effect,” meaning the phenomenon where a product or service’s potential customer base increases as more people buy or use it.
“This vertically integrated software plus hardware model aims to reduce latency across the stack of decision making and put the network effect into operational execution,” Mitra said during the company’s earnings call this week. “This directly feeds into our capital allocation flywheel, driving execution into high gear in 2025, which we’re likely to observe again in 2026.”
Zooming the lens back in, this is all context to consider in light of Mitra’s words of caution earlier this week. He has had a front-row seat to the last decade-plus of finding alignment between senior living operators and owners. He has repeatedly stressed that senior living is not a business where one can simply “write a check” and watch money roll in. It’s an operationally intensive business, and without a layer of support, even well-planned SHOP efforts could fall apart.
To bring back the SHOP “pool” analogy, Welltower has spent the last decade learning what it takes to swim in choppy waters – those jumping into the pool today have not. Unless they can learn what it takes to swim, they could sink to the bottom.
Said another way, I think Mitra was saying with his warning that it took Welltower a decade to get its RIDEA contracts to their current state. He has long described what he sees as a lack of alignment between operators and owners of communities. Without realizing what it takes to bridge that gap, companies with burgeoning SHOP segments will have to learn potentially painful lessons by themselves, just as Welltower has done.
SHOP success rides on support for operators
Mitra is not the only senior living executive who feels that senior living alignment rests on a REIT’s ability to provide support to its operating partners. Last year, I had the chance to sit down with Justin Hutchens, executive vice president of senior housing and chief investment officer at Ventas, who walked me through the company’s playbook for working with its operating partners.
Hutchens and Ventas CEO Debra Cafaro have long touted the company’s “right market, right asset, right operator” strategy as a differentiator. As the name implies, the REIT is seeking to pair quality operators with communities and markets they can succeed in. All the while, the REIT is giving its operating partners access to market benchmarks, info on rates, competition and other insights to help improve their performance.
“We’re going to point you directly to the opportunity where you can make the biggest impact the fastest,” Hutchens told me. “The effort is very collaborative, and that’s important, because at the end of day, the managers are running this business.”
While Mitra didn’t name any names when he spoke of “several health care REITs and private funds jumping into SHOP” and “hiring a few asset managers to manage the managers,” I couldn’t help but think of Janus Living, the recent spinoff from senior housing REIT Healthpeak (NYSE: DOC) that is launching with a 34-community, 10,422-unit senior housing portfolio in 10 states. Janus is set to own all of its properties in a RIDEA operational structure and Healthpeak is acting as its external manager with a substantial ownership stake in the spinoff.
That’s not to say Janus Living isn’t thinking of supporting its operating partners. Healthpeak is bringing in operators Pegasus Senior Living and Ciel Senior Living with contracts that include “strong alignment through performance incentives,” the company noted.
Again, I want to stress that I don’t have much insight into Janus Living or Healthpeak’s plans with it. But I do believe that the strategy of alignment will rest on how well Healthpeak can support its operating partners.
Many of the investors building out SHOP strategies have deep experience in the senior living sector and meaningful relationships with strong operators. Janus is no exception, given Healthpeak’s history going back to its days as HCP in senior living. But to the point Mitra was making, this experience in the space is no guarantee of SHOP success, and the leaders of these newer SHOP players could stumble if they put too much stock in what they already know and do not operate from a place of humility about what they need to learn.
In the end it took Welltower 10 years to land on its current RIDEA structure, and without heeding his advice, I think it could take other companies a similarly long time to do so. Whether they have the time to figure it out is another question.
