REITs Gain Quiet Control Over Nursing Homes as Oversight Lags, KFF Analysis Shows 

Real estate investment trusts (REITs) have come to own a substantial share of buildings in the nursing home and long-term care sector over the past decade, and an examination of court filings and corporate records shows that these landlords have more influence than health care facilities publicly acknowledge.

REITs currently hold investments in 1 in 6 nursing homes.

According to a KFF Health News analysis, despite their growing presence, REITs remain largely invisible to regulators because facilities are not required to disclose landlord relationships or rent payments in Medicare reports.

Efforts to increase transparency have stalled, leaving oversight focused mainly on care quality rather than ownership structures, KFF suggests. Families and advocates say the current system allows landlords to benefit financially while avoiding accountability when residents suffer. And while REITs bring investment capital into long-term care, their profit-driven structure and limited regulatory oversight can contribute to poor care outcomes.

Meanwhile, REITs counter that they are merely property owners and not responsible for patient care. Court records seen by KFF News, however, reveal that they often influence key decisions, such as selecting management companies, setting occupancy targets and closely monitoring finances, including staffing and spending.

A lawsuit over resident Pearlene Darby’s death, for example, blamed both the nursing home operator and its owner, CareTrust REIT (NYSE: CTRE) for alleged neglect.

In the year Darby died, the nursing home operator paid CareTrust REIT more than $1 million in rent, while the nursing home itself ran a deficit, court records show. Both CareTrust and the operator, City Creek Post-Acute and Assisted Living, denied responsibility.

In court filings, CareTrust officials said that the California-based REIT is not involved in day-to-day nursing home decisions or patient care, and that it monitors facilities to ensure nothing jeopardizes rent payments.

“We are the property owners, not the operators,” CareTrust Corporate Counsel Joseph Layne told KFF Health News.

While declining to comment on litigation matters involving CareTrust, Layne also explained that CareTrust selects its tenants on their ability to deliver quality care.

“Like all triple-net landlords, we only earn a return on our investment when our tenants make their lease or loan payments,” Layne said in the statement to KFF News, which CareTrust shared with Skilled Nursing News as well. “Any failure by a tenant to effectively conduct its operations or to maintain and improve our properties could adversely affect its business reputation and its ability to attract and retain residents in those properties, which in turn could adversely affect their ability to make their lease payments to us.”

Although federal tax rules bar REITs from operating health care facilities, according to internal records seen by KFF News, CareTrust selected the nursing home’s management, required at least 80% occupancy, and closely monitored finances – including spending on nurses and food – along with safety inspections and Medicare quality ratings.

On the other hand, lawsuits also reveal that some REITs may tolerate or fail to address poor conditions – such as understaffing, safety violations, and weak management – as long as facilities continue to meet financial expectations like rent payments.

The financial structure of REITs plays a key role. They collect rent from operators and must distribute most profits to investors, benefiting from tax advantages as long as they do not directly manage care. This arrangement can strain facility budgets, especially when rent payments are high, potentially diverting resources away from patient care. In some cases, hospitals and nursing homes burdened with rent obligations have closed or gone bankrupt.

REITs are required to distribute most of their income and don’t have to pay the 21% federal corporate income tax on it, and if the REIT ends up directly or indirectly operating or managing, it loses the tax break for five years. To work around this rule, REITs typically lease the property to a third company that runs the nursing home or assisted living facility in order to maintain its tax break. Nareit, an industry association, said health care REITs distributed more than $7 billion in dividends in 2024, the story notes.

The article also highlights conflicts of interest. For example, some REIT executives are tied to the companies managing the facilities they own, blurring the line between landlord and operator. Facilities linked to these arrangements have faced lawsuits and lower staffing levels compared to national averages.

Strawberry Fields REIT is a landlord to 131 nursing home buildings, with operations in 66 of them run by companies owned by its CEO Moishe Gubin and director Michael Blisko. Gubin and Blisko also jointly own Infinity Healthcare Management, which manages these facilities, with Blisko serving as CEO.

The Infinity-managed nursing homes provided about 1.25 fewer nursing care hours per resident per day compared to the national average, according to the KFF analysis. And these affiliated facilities and operator have faced extensive litigation, including 30 death and injury settlements exceeding $4 million and a $12 million jury award in a related case.