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Less than one decade ago, Brookdale Senior Living (NYSE: BKD) operated 229 communities under senior living management contracts with owners. Today, the company has just seven left.
The data point shows Brookdale’s transformation from primarily a manager of senior housing communities into a substantial owner and SHOP operating partner, and it got me thinking about all the ways the company has changed since I first started covering it.
I can recall sitting in a small conference room here in Chicago in 2018 with my fellow coworkers trying to spin out just what would happen to Brookdale, then more than 1,000 communities large. My coworkers and I speculated that Brookdale would have to either downsize significantly or potentially risk collapsing under its own weight. Back then, we also wondered whether the company would change hands to a new owner, and there were rumors swirling that the operator was exploring that.
In the years that followed, Brookdale did not change hands, but it did shrink. Under former CEO Cindy Baier and now current CEO Nick Stengle, Brookdale has enacted a total transformation of the company’s focus and portfolio, going from an overweight size and a portfolio that Baier once said was full of leases that were “bleeding cash” to a much more agile company with 517 communities.
Today, I think Brookdale is on firmer footing thanks to its transformation. Although the operator isn’t out of the woods with regard to operations, it is now engaged in a new “era” that could include limited growth in certain markets, Stengle told me last month.
Of course, this transformation does not preclude a potential sale in the future – to that end, I think almost every company is for sale for the right price. But Brookdale’s transformation exemplifies both how the nation’s largest operator has responded with the industry’s current era and how much senior living as an industry has shifted in its owner-operator structures.
One of Brookdale’s operator peers, Sonida Senior Living (NYSE: SNDA) also is pivoting to ownership, especially with its acquisition of CNL Healthcare Properties.
In this members-only SHN+ Update, I analyze Brookdale and Sonida’s most recent earnings calls and ongoing transformation to offer the following takeaways:
- Key aspects of the Brookdale and Sonida transformations since 2017
- Why the nation’s largest senior living operators have pivoted to ownership
- What these trends say about the future of senior living operations
Brookdale, Sonida’s decade-long pivot to ownership
Management contracts are arrangements under which senior living operators earn a fee, often a single-digit percentage of total revenue. But traditional management contracts – along with triple-net leases – have drawn criticism from some prominent industry voices, while two of the largest providers in the country – Brookdale and Sonida – also have shifted away from them.
Brookdale’s portfolio today contains just under 4,300 units operated under managed contracts. In the first quarter of 2017, Brookdale earned more than $22.4 million from management fees. Fast-forward to the company’s most recent earnings and management fees represent just $5 million, a small and shrinking sliver of the company’s total revenue.
Operators under those agreements don’t “participate at a meaningful economic level in the upside or downside of a given community,” and thus, Brookdale’s pivoted away from them, Stengle said. The company may reduce that number even further in the future, and its leaders anticipate it will earn just $1 million from management fees for the remainder of 2026.
As I’ve shared a few times now, industry veterans, including Aegis CEO Dwayne Clark, have spoken out against management agreements for various reasons, including how they can drive misalignment between owners and operators. An operator managing a community for the once-ubiquitous 5% to 6% fee is not incentivized to bring their A-team to the property, Clark said.
“It’s a broken strategy,” he told me in 2022. “The building that should have been filled in 25 months is now going to take four or five years.”
In 2017, more than half of Brookdale’s 1,052-community portfolio was composed of either leases or communities managed under joint ventures with owners. The company owned 362 properties representing a little more than 33,000 units.
Interestingly, Brookdale only increased the total number of owned communities by one since then, with a 363-property owned portfolio today. But those communities represent a far greater share than before, with about two-thirds of the company’s units weighted toward ownership.
Brookdale’s Stengle is not alone in the belief that management contracts are unideal for the modern era of senior living. In 2026 substantially every U.S. senior housing REIT is building up a senior housing operating portfolio with contracts that align owner and operator. While owners under these arrangements are exposed to more risk of an underperforming community, they also can share more of the upside if they do well. And the idea is that owners and operators will be motivated to row more closely in sync if they both have skin in the game.
Sonida is in a similar position as Brookdale. In 2017, the company – then doing business as Capital Senior Living – operated 129 communities. Of those, 46 were leased, while 83 were owned.
Now, in 2026, Sonida owns or part-owns its entire 153-property senior housing portfolio. The company’s recent $1.8 billion deal to acquire CNL Healthcare Properties made it the eighth-largest owner of senior living in the U.S. behind Storypoint Senior Living, according to the latest ASHA 50 list.
Industry trends spell more ownership strategies ahead
Senior living operators are awash in a sea of challenges and opportunities in 2026.
On the one hand, the oldest baby boomers are turning 80 this year, and the demand straightaway the industry has looked forward to for years is finally here. On the other hand, the job of a senior living operator has never been harder in some respects as the boomers necessitate rethinking multiple aspects of the care continuum. Senior living communities are never cheap to operate, but rising costs, from staffing to utilities, are putting even more pressure on their bottom lines.
Senior living operators that own some or all of their communities have an extra benefit in the form of equity. I don’t think it’s coincidental that Brookdale and Sonida have shifted so dramatically toward community ownership given that they are both publicly traded. While it’s arguable how much investors will take the value of their owned properties into account – and leadership has called out other benefits, such as reduction in rent burdens, as driving motivations – being a real estate owner creates another layer of risk insulation compared to a more thinly capitalized pure-play operator.
Of course, real estate ownership also comes with its own risks and burdens, including the need for CapEx – certainly not to be underestimated given the industry’s generally aging stock and the rising expectations of consumers.
Operators with management-heavy portfolios risk an owner changing partners in one fell swoop and removing potentially revenue-generating properties from their hands. It’s not unheard of for operators to shed dozens of communities at once if their owners decide to go in a different direction. Ownership gives operators more control to avoid those outcomes.
Not to mention, ownership also allows operators to benefit from the sale of a community, such as when recycling capital for new developments or acquisitions.
In other words, the trend away from management contracts and triple-net leases is rooted in complex risk-reward calculations, and some organizations certainly changed their calculus after the Covid-19 pandemic, which took the operational intensity of senior living to previously unheard-of levels while also putting an increased premium on owner-operator alignment.
That isn’t to say third-party management isn’t still a trend. Senior Housing News has in 2026 tracked multiple companies seeking out more simple management agreements as a way to grow in the meantime, sometimes with turnaround portfolios that might shrink or grow depending on a need.
But my larger point is that all signs still point to continued ownership plays for senior living providers, and the next chapters for Brookdale and Sonida will be rooted in their pivots toward ownership.