Ventas, Welltower Go ‘All-In’ On Senior Housing as Demand Takes Off

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Health care-focused real estate investment trusts (REITs) are placing increasingly large bets on senior living with an eye on demand ahead. It’s a strategy that is reshaping the industry.

Days ago, leaders with Welltower (NYSE: WELL) announced a “transformative” shift toward senior living with a $14 billion deal to acquire more than 700 senior living communities. The company also sold to Kayne Anderson a 296-property outpatient medical office portfolio for $7.2 billion. Post-sale, Welltower expects that more than 80% of the REIT’s annual in-place net operating income (NOI) will stem from senior housing communities.

Three days later, Ventas (NYSE: VTR) announced that its senior housing operating portfolio (SHOP) now comprises more than half of its annual NOI thanks in part to its $2.2 billion slate of acquisitions in 2025.

Zooming out the lens, it’s easy to see why these companies are making bigger and bigger bets on senior housing. The number of people age 80 and older is expected to increase 28% over the next 5 years, according to a data point that Ventas commonly cites. That is compared to just 5% growth of the same group in the five years following the Great Financial Crisis of 2008.

The senior housing sector for the third straight quarter in 2025 led in total returns among a variety of industries, including hotel and self-storage, according to a recent National Council of Real Estate Investment Fiduciaries (NCREIF) report.

As Ventas and Welltower build up their senior housing portfolios, primarily through RIDEA contracts, they are amassing a growing stable of operating partners and touching an ever-widening slate of properties.

REITs are plugging those properties into data science platforms that help operators make better decisions, usually for communities in a regional footprint. In the case of Welltower, new incentives are pushing these operators to align themselves even more closely with the REIT and its share price, a move that CEO Shankh Mitra said is a “dramatic change which strikes at the heart of this company’s incentive structure.”

Bigger bets also come with bigger risks. Although I don’t see much on the horizon that could derail the plans of REITs that are increasingly focusing on senior living, I also felt that way just before the Covid-19 pandemic plunged the entire industry – not to mention the world – into chaos. That’s not to say I think another black swan event is coming, but only that going “all-in” on senior living does demand confidence in market stability.

In this members-only SHN+ Update, I analyze recent earnings calls from Ventas and Welltower along with other recent industry data and offer the following takeaways:

• How Ventas and Welltower have upped their bet in senior living this year
• Why large REITs are “all-in” on senior living
• What recent moves from Ventas and Welltower mean for senior living at large

Welltower, Ventas put more chips on senior housing

On Oct. 27, Welltower announced a series of deals carrying the largest dollar amount I’ve ever seen for such an event, $14 billion. The REIT added more than 700 senior housing communities, comprising more than 46,000 units in the U.K., U.S., and Canada. Included in that total was a deal to acquire 284 communities managed by Barchester Healthcare in the U.K. for more than $6.9 billion in today’s exchange rates.

Welltower’s transactions included the acquisition of more than 150 communities in the U.S., including “trophy senior housing communities” in Boston and in Westchester County, New York.

The REIT financed the transactions partly by using cash on hand and proceeds from the sale of an outpatient medical portfolio valued at $7.2 billion. The medical officer portfolio contributed around 16.1% of the company’s annualized NOI in the second quarter of 2025, before the sale.

Thanks to the acquisitions and sales, more than 80% of the REIT’s annual NOI now stems from senior housing, its leaders said this week during the company’s third-quarter 2025 earnings call. Before the sale, the REIT’s triple-net and senior housing operating portfolio (SHOP) segments collectively contributed 69% of the company’s annual NOI.

Ventas crossed a similarly significant threshold in the third quarter of this year. On Thursday, the company’s leaders noted that senior living now contributes more than half of the company’s annual NOI, representing the realization of a goal set earlier this year. To get there, the Chicago-based REIT has since the middle of 2024 completed $4.1 billion in senior housing investments.Both Welltower and Ventas see even more opportunities to grow those parts of their businesses ahead via more M&A as development remains at a standstill.

Ventas can buy properties for discounts as low as half of replacement cost. As such the REIT has “seen the opportunity to buy assets that are delivering significant growth potential, and that’s where we’re leaning in,” said Ventas Chief Investment Officer Justin Hutchens during the company’s 3Q25 earnings call.

The REIT is not shy about its belief that a bigger, more targeted SHOP segment gives it more ability to support its operating partners’ pricing, sales, expense control and capital expenditures via a playbook of tools and tech.

In a similar vein, Welltower also is picking up properties at reasonable prices given the upside ahead, in some cases far below replacement cost.

“We believe that re-doubling our efforts in the seniors housing business represents the surest and fastest path to achieving our mission of elevating both the resident and site-level employee experience, while also enhancing our opportunity to deliver long-term compounding of per share growth for our existing investors,” Mitra stated in an announcement of the acquisitions.

Notably, Mitra said that the transaction and other recent changes has ushered in “Welltower 3.0,” a company that is “an operating company in a real estate wrapper.” That is a term I’ve heard him use before, but with the transaction and other recent moves, Welltower is putting even more of its money where its mouth is, so to speak.

With every new acquisition, I see the pieces coming together for a world dominated by big REITs and their regional partners. Operating companies like the partners of Ventas and Welltower simply have more tools and resources at their disposal thanks to those relationships. Executives at both Welltower and Ventas have said that they can effectively create new destinies for operators with regional densities.

It’s not hard for me to envision a near future that is more difficult for high-quality operators to remain competitive without a deep-pocketed, institutional capital partner, at least while new development is slow. And because senior living operators that want to work with them must agree to their standards, I see the influence of these companies only growing in the years to come.

New incentives shift owner-operator relationships

Welltower’s $14 billion acquisition wasn’t the only part of the company’s recent release that caught my eye.

The REIT also announced a new incentive structure that aligns the performance of three operators – Cogir, Oakmont Senior Living and StoryPoint – with that of Welltower’s value as a company. Those operators have chosen to receive a portion of their incentive fee in the form of ownership units of the company’s operating partnership, Welltower OP. In other words, those operators will stand to benefit by actually creating value for their ownership partners.

“I’ve been bothered by the misalignment of the incentives between our company (the owner of assets) and our operating partners (the manager of the community),” Mitra said on the company’s third-quarter earnings call.

In the not-too-distant past, senior living operators earned a straight management fee for their efforts, which typically was around 5%. Then came management structures under RIDEA that rewarded operators not just for managing a community, but for the outcomes that occur inside of it.

Welltower’s new incentive takes that idea even further down its logical trajectory. Ultimately, community performance fuels results at the company that owns the community. By giving operators a piece of that pie, Welltower has far more deeply linked its business outcomes with that of its partners.

“My utopian idea of everyone swimming or sinking together is finally taking shape – an ecosystem of internal and external participants where everybody is fully aligned and everybody is all-in,” Mitra said.

Unless I am mistaken, no other senior housing REIT has created anything like that before. But I can see why it’s a move that Welltower and Mitra made. Neither senior living community owners nor their operators have been wild about the current state of senior living alignment. Welltower’s new incentive means that a higher share price presumably means a higher payout for an operator, I assume more than what they could have earned with a simple incentive fee. That alone could push operators to work harder and deliver better results, especially during a time when senior living companies are trying to achieve better margins.

I do see a possible risk of these kinds of arrangements, however. While I haven’t yet talked with Welltower management and therefore don’t know the exact details of these new incentive structures, moves that improve the value of a stock don’t necessarily translate into better community operations – even if in a “utopian” scenario, these are tied. Certain types of investors, particularly private equity firms, are under intense scrutiny for taking actions such as cost-cutting measures or overleveraging assets that drive shareholder returns but essentially gut a company. The REITs are painting a clearer picture of tying operating quality to value, but they will have to remain disciplined and focused on the right time horizons to achieve and maintain this alignment.

All of this said, I’m eager to see whether Welltower’s new incentive structure pushes its operating partners to new heights with regard to performance. If so, I think others will weigh these sorts of approaches in the future.

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