Welltower and Ventas Fully Commit to Senior Housing Amid Rising Demand
This story is part of your SHN+ subscription
Health care-focused real estate investment trusts (REITs) are increasingly investing in senior living, anticipating a surge in demand. This strategic shift is transforming the industry landscape.
Recently, Welltower (NYSE: WELL) announced a groundbreaking $14 billion deal to acquire over 700 senior living communities. In a parallel move, the company sold a 296-property outpatient medical office portfolio to Kayne Anderson for $7.2 billion. Following this sale, Welltower expects that more than 80% of its annual in-place net operating income (NOI) will derive from senior housing communities.
Just three days later, Ventas (NYSE: VTR) revealed that its senior housing operating portfolio (SHOP) now accounts for over half of its annual NOI, bolstered by a $2.2 billion acquisition spree in 2025.
Looking at the broader picture, the rationale behind these substantial investments becomes clear. The population aged 80 and older is projected to grow by 28% over the next five years, a stark contrast to the mere 5% growth seen in the same demographic during the five years following the 2008 financial crisis.
For the third consecutive quarter in 2025, the senior housing sector led total returns among various industries, including hotels and self-storage, as reported by the National Council of Real Estate Investment Fiduciaries (NCREIF).
As Ventas and Welltower expand their senior housing portfolios—primarily through RIDEA contracts—they are building a robust network of operating partners and diversifying their property holdings.
REITs are integrating these properties into data science platforms, enabling operators to make informed decisions within their regional footprints. Welltower is incentivizing operators to align more closely with the REIT’s share price, a significant shift that CEO Shankh Mitra describes as a “dramatic change” in the company’s incentive structure.
However, larger investments come with increased risks. While there are currently no apparent threats to the REITs’ plans, the unpredictability of the market is a concern. The chaos brought on by the Covid-19 pandemic serves as a reminder of how quickly circumstances can change. Although another unforeseen event is not anticipated, the commitment to senior living requires a strong belief in market stability.
In this members-only SHN+ Update, I analyze recent earnings calls from Ventas and Welltower, along with other industry data, highlighting key takeaways:
- How Ventas and Welltower have increased their investments in senior living this year
- Why large REITs are fully committed to senior living
- What recent developments from Ventas and Welltower mean for the broader senior living landscape
Welltower, Ventas put more chips on senior housing
On October 27, Welltower announced a historic $14 billion acquisition, adding over 700 senior housing communities, totaling more than 46,000 units across the U.K., U.S., and Canada. This includes a significant deal to acquire 284 communities managed by Barchester Healthcare in the U.K. for over $6.9 billion.
The REIT also acquired more than 150 communities in the U.S., including prestigious senior housing locations in Boston and Westchester County, New York. The financing for these transactions was partly sourced from cash reserves and proceeds from the sale of the outpatient medical portfolio, which previously contributed around 16.1% of the company’s annualized NOI.
As a result of these acquisitions, Welltower now derives over 80% of its annual NOI from senior housing, a significant increase from the 69% contribution from its triple-net and SHOP segments before the sale.
Similarly, Ventas achieved a milestone in the third quarter, with senior living now accounting for more than half of its annual NOI, fulfilling a goal set earlier this year. Since mid-2024, Ventas has completed $4.1 billion in senior housing investments. Both companies see further opportunities for growth through mergers and acquisitions, especially as development remains stagnant.
Ventas is capitalizing on the chance to acquire properties at discounts, sometimes as low as half of replacement costs. This strategy allows the REIT to focus on assets with significant growth potential, as noted by Ventas EVP, Senior Housing and Chief Investment Officer Justin Hutchens during the 3Q25 earnings call.
Welltower is also acquiring properties at attractive prices, often below replacement costs. “We believe that intensifying our focus on the senior housing business is the quickest path to enhancing both resident and employee experiences while delivering long-term growth for our investors,” Mitra stated during the acquisition announcement.
Mitra introduced the concept of “Welltower 3.0,” describing the company as “an operating company in a real estate wrapper.” This reflects a commitment to integrating operational capabilities with real estate investments.
With each acquisition, the landscape is evolving, favoring large REITs and their regional partners. Operating companies associated with Ventas and Welltower benefit from enhanced resources and tools, enabling them to redefine their operational strategies.
New incentives shift owner-operator relationships
Welltower’s $14 billion acquisition was not the only noteworthy announcement. The REIT introduced a new incentive structure that aligns the performance of three operators—Cogir, Oakmont Senior Living, and StoryPoint—with Welltower’s overall value. These operators can now receive a portion of their incentive fees in the form of ownership units in Welltower OP, creating a direct link between their performance and the REIT’s success.
Mitra expressed concern over the previous misalignment of incentives between asset owners and operators. Historically, operators earned a flat management fee, typically around 5%. The introduction of RIDEA management structures aimed to reward operators based on community outcomes, but Welltower’s new incentive takes this concept further.
By linking community performance to company results, Welltower has created a more integrated business model. “My vision of everyone swimming or sinking together is finally taking shape,” Mitra remarked, emphasizing a collaborative ecosystem where all participants are aligned.
This innovative approach is unprecedented in the senior housing REIT sector. Both owners and operators have expressed dissatisfaction with traditional alignment methods, and Welltower’s new structure could incentivize operators to enhance performance, particularly as the industry seeks to improve margins.
However, there are potential risks associated with these arrangements. While aligning stock value with community operations is a positive step, it does not guarantee improved operational quality. Investors, especially private equity firms, often face scrutiny for prioritizing shareholder returns over operational integrity. REITs must remain disciplined to maintain this alignment while focusing on long-term success.
Overall, I am eager to see if Welltower’s new incentive structure elevates its operating partners’ performance. If successful, it may inspire similar strategies across the industry.
This story is part of your SHN+ subscription
Health care-focused real estate investment trusts (REITs) are increasingly investing in senior living, anticipating a surge in demand. This strategic shift is transforming the industry landscape.
Recently, Welltower (NYSE: WELL) announced a groundbreaking $14 billion deal to acquire over 700 senior living communities. In a parallel move, the company sold a 296-property outpatient medical office portfolio to Kayne Anderson for $7.2 billion. Following this sale, Welltower expects that more than 80% of its annual in-place net operating income (NOI) will derive from senior housing communities.
Just three days later, Ventas (NYSE: VTR) revealed that its senior housing operating portfolio (SHOP) now accounts for over half of its annual NOI, bolstered by a $2.2 billion acquisition spree in 2025.
Looking at the broader picture, the rationale behind these substantial investments becomes clear. The population aged 80 and older is projected to grow by 28% over the next five years, a stark contrast to the mere 5% growth seen in the same demographic during the five years following the 2008 financial crisis.
For the third consecutive quarter in 2025, the senior housing sector led total returns among various industries, including hotels and self-storage, as reported by the National Council of Real Estate Investment Fiduciaries (NCREIF).
As Ventas and Welltower expand their senior housing portfolios—primarily through RIDEA contracts—they are building a robust network of operating partners and diversifying their property holdings.
REITs are integrating these properties into data science platforms, enabling operators to make informed decisions within their regional footprints. Welltower is incentivizing operators to align more closely with the REIT’s share price, a significant shift that CEO Shankh Mitra describes as a “dramatic change” in the company’s incentive structure.
However, larger investments come with increased risks. While there are currently no apparent threats to the REITs’ plans, the unpredictability of the market is a concern. The chaos brought on by the Covid-19 pandemic serves as a reminder of how quickly circumstances can change. Although another unforeseen event is not anticipated, the commitment to senior living requires a strong belief in market stability.
In this members-only SHN+ Update, I analyze recent earnings calls from Ventas and Welltower, along with other industry data, highlighting key takeaways:
- How Ventas and Welltower have increased their investments in senior living this year
- Why large REITs are fully committed to senior living
- What recent developments from Ventas and Welltower mean for the broader senior living landscape
Welltower, Ventas put more chips on senior housing
On October 27, Welltower announced a historic $14 billion acquisition, adding over 700 senior housing communities, totaling more than 46,000 units across the U.K., U.S., and Canada. This includes a significant deal to acquire 284 communities managed by Barchester Healthcare in the U.K. for over $6.9 billion.
The REIT also acquired more than 150 communities in the U.S., including prestigious senior housing locations in Boston and Westchester County, New York. The financing for these transactions was partly sourced from cash reserves and proceeds from the sale of the outpatient medical portfolio, which previously contributed around 16.1% of the company’s annualized NOI.
As a result of these acquisitions, Welltower now derives over 80% of its annual NOI from senior housing, a significant increase from the 69% contribution from its triple-net and SHOP segments before the sale.
Similarly, Ventas achieved a milestone in the third quarter, with senior living now accounting for more than half of its annual NOI, fulfilling a goal set earlier this year. Since mid-2024, Ventas has completed $4.1 billion in senior housing investments. Both companies see further opportunities for growth through mergers and acquisitions, especially as development remains stagnant.
Ventas is capitalizing on the chance to acquire properties at discounts, sometimes as low as half of replacement costs. This strategy allows the REIT to focus on assets with significant growth potential, as noted by Ventas EVP, Senior Housing and Chief Investment Officer Justin Hutchens during the 3Q25 earnings call.
Welltower is also acquiring properties at attractive prices, often below replacement costs. “We believe that intensifying our focus on the senior housing business is the quickest path to enhancing both resident and employee experiences while delivering long-term growth for our investors,” Mitra stated during the acquisition announcement.
Mitra introduced the concept of “Welltower 3.0,” describing the company as “an operating company in a real estate wrapper.” This reflects a commitment to integrating operational capabilities with real estate investments.
With each acquisition, the landscape is evolving, favoring large REITs and their regional partners. Operating companies associated with Ventas and Welltower benefit from enhanced resources and tools, enabling them to redefine their operational strategies.
New incentives shift owner-operator relationships
Welltower’s $14 billion acquisition was not the only noteworthy announcement. The REIT introduced a new incentive structure that aligns the performance of three operators—Cogir, Oakmont Senior Living, and StoryPoint—with Welltower’s overall value. These operators can now receive a portion of their incentive fees in the form of ownership units in Welltower OP, creating a direct link between their performance and the REIT’s success.
Mitra expressed concern over the previous misalignment of incentives between asset owners and operators. Historically, operators earned a flat management fee, typically around 5%. The introduction of RIDEA management structures aimed to reward operators based on community outcomes, but Welltower’s new incentive takes this concept further.
By linking community performance to company results, Welltower has created a more integrated business model. “My vision of everyone swimming or sinking together is finally taking shape,” Mitra remarked, emphasizing a collaborative ecosystem where all participants are aligned.
This innovative approach is unprecedented in the senior housing REIT sector. Both owners and operators have expressed dissatisfaction with traditional alignment methods, and Welltower’s new structure could incentivize operators to enhance performance, particularly as the industry seeks to improve margins.
However, there are potential risks associated with these arrangements. While aligning stock value with community operations is a positive step, it does not guarantee improved operational quality. Investors, especially private equity firms, often face scrutiny for prioritizing shareholder returns over operational integrity. REITs must remain disciplined to maintain this alignment while focusing on long-term success.
Overall, I am eager to see if Welltower’s new incentive structure elevates its operating partners’ performance. If successful, it may inspire similar strategies across the industry.
