Why This Matters
Real estate investment trusts, or REITs, now own a significant share of U.S. long-term care facilities, from nursing homes to assisted living centers. Their growing role as landlords means financial decisions far from the bedside can influence staffing levels, occupancy targets, and ultimately the safety of vulnerable residents.
The case of Pearlene Darby, an 81-year-old retired teacher who died in 2020 after developing severe bedsores and infections, highlights the stakes. Her family’s lawsuit did not just target the nursing home’s operator in Sacramento, California; it also named CareTrust REIT, which owned the building and collected more than $1 million in rent that year, according to court records.
Industry data show how widespread this model has become. REITs now own about a fifth of the nation’s senior housing, including assisted living, memory care, and independent living, and hold investments in roughly 1 in 6 nursing homes. Health care-focused REITs are worth nearly a quarter of a trillion dollars and distributed more than $7 billion in dividends in 2024, according to the REIT trade group Nareit.
Key Facts and Quotes
Federal tax rules give REITs a powerful incentive to stay out of direct operations: if they “directly or indirectly operate or manage” a health care facility, they can lose tax breaks for five years. In Darby’s case, however, internal documents filed in court showed CareTrust was no passive owner. The REIT chose the management company, required the facility to keep at least 80% of its beds filled, and tracked spending on nurses and food in detail, the records said.
Those same documents showed the REIT kept an eye on government safety inspections and Medicare quality ratings. Yet when Darby’s daughter alleged that the home repeatedly left her mother in her own feces and urine, both the operator and CareTrust denied liability. CareTrust told the court it does not make day-to-day decisions about resident care and monitors facilities mainly to protect rent payments.
In a written statement, CareTrust corporate counsel Joseph Layne said, “We are the property owners, not the operators.” The lawsuit was settled on confidential terms last year, and the defendants did not admit wrongdoing.
Researchers have begun examining what happens when REITs take over nursing home real estate. One study found REIT investment was linked to higher spending on nursing wages. Another reported that, after being bought by REITs, some nursing homes replaced registered nurses with less-skilled staff and later saw worse health inspection results. A third analysis found that investor-owned hospital chains that sold their buildings to REITs were more likely to close or go bankrupt.
That pattern was seen in the 2024 collapse of Steward Health Care, a major hospital system that had earlier sold much of its real estate. According to researchers, private equity owners often kept the sale proceeds as profit while the hospitals were left with new rent obligations. “There were no improvements in clinical outcomes,” said Thomas Tsai, an associate professor at the Harvard T.H. Chan School of Public Health.
What It Means for You
For families choosing a nursing home or assisted living facility, ownership can be more complex than the name on the sign. A property may be owned by a REIT, managed by a separate operating company, and staffed by yet another contractor. That can make it harder to know who is accountable when serious problems arise, even when courts award large verdicts in cases involving poor care.
As the population ages and more care shifts to privately owned facilities, regulators and lawmakers are likely to keep asking whether current rules give REITs too much financial upside and too little responsibility for quality. Families may want to ask not only about staffing and inspection histories, but also who owns the building and how financial pressures could affect care over time.
When you or your family evaluate long-term care options, how important is it to know who owns the building and who runs the facility day to day?
Sources
NPR and KFF Health News investigation by Jordan Rau, published April 19, 2026; court records and internal documents in litigation involving City Creek Post-Acute and Assisted Living and CareTrust REIT; public statements and securities filings by CareTrust REIT; industry data and tax information from Nareit; peer-reviewed research on REIT ownership, nursing home quality, and hospital financial outcomes, including analyses citing the Steward Health Care bankruptcy and commentary by Thomas Tsai of the Harvard T.H. Chan School of Public Health.
