By the time she was hospitalized in 2020, Pearlene Darby, a retired teacher, had open sores on both legs, both hips, both heels and a five-inch gash on her tailbone. She died two weeks later at age 81 from infections and bedsores, her death certificate says. Her daughter sued the Sacramento nursing home where Darby lived, alleging staff repeatedly left her sitting in her own feces and urine.
The lawsuit, settled on confidential terms last year, named not only the nursing home’s managers but also the building’s owner, CareTrust REIT. In the year Darby died, City Creek Post‑Acute and Assisted Living paid CareTrust more than $1 million in rent while running a deficit, court records show. Internal documents filed in the case indicate CareTrust selected the nursing home’s management, required an 80% minimum occupancy through the lease, tracked monthly spending on nurses and food, and monitored state inspection findings and Medicare quality ratings. CareTrust and the operator denied liability, saying the REIT is a property owner, not an operator.
Over the past decade, real estate investment trusts (REITs) have bought thousands of buildings that house nursing homes, assisted living, memory care, hospitals and medical offices. KFF Health News’ review of court filings and corporate records shows landlords often exert more influence than facilities publicly acknowledge. Documents reveal REITs sometimes pick and keep managers even when facilities struggle with staffing, governance, and repeated safety violations. A California jury in March awarded $92 million in punitive damages against a former REIT over the death of a 100‑year‑old resident who froze to death after wandering from an assisted living facility.
REITs remain largely invisible to health regulators. Hospitals and nursing homes are not required to disclose landlord identities or rent payments in the annual reports submitted to Medicare. A Biden-era rule that would have required nursing homes to disclose REIT involvement was indefinitely suspended under the Trump administration. Officials at the Centers for Medicare & Medicaid Services say the agency focuses on quality of care rather than corporate tax status or ownership structure.
Industry analyses show REITs now own about one‑fifth of the nation’s senior housing stock and have investments in roughly one in six nursing homes. Publicly traded health care REITs are collectively worth nearly a quarter‑trillion dollars; Nareit reported health care REITs paid more than $7 billion in dividends in 2024.
Research on REITs’ effects on care is mixed. One study linked REIT investment with higher spending on nursing wages, but others found that after acquisition homes often replaced registered nurses with less-skilled staff and had worse health inspection results. Analyses also found hospital chains that sold buildings to REITs were more likely to close or go bankrupt, with private equity sometimes keeping sale proceeds while hospitals took on new rent burdens. “There were no improvements in clinical outcomes,” said Thomas Tsai of Harvard’s T.H. Chan School of Public Health.
Tax rules explain part of the REIT model. REITs must distribute most income and avoid the 21% federal corporate tax, but a REIT that “directly or indirectly operates or manages” a health care facility loses that tax break for five years. To preserve the tax benefit, many REITs lease properties to separate operators, though leases can give landlords leverage over operations and finances.
Several detailed examples illustrate how the model has played out:
– Strawberry Fields REIT owns or controls 131 nursing home buildings; 66 of those facilities are operated by companies tied to Strawberry Fields executives who also own Infinity Healthcare Management. A KFF Health News analysis found Infinity-affiliated nursing homes averaged about 1 hour 15 minutes less direct nursing care per resident per day than the national average of four hours. Infinity and some homes have settled multiple death and injury lawsuits totaling millions. Lakeview Rehabilitation and Nursing Center in Chicago, owned or controlled through related entities, provided one star from Medicare. A jury awarded $12 million in a suit over the 2023 death of Shirley Adams, who developed infected bedsores.
– Colony Capital (later renamed DigitalBridge) owned both the Greenhaven Estates building and the operation through layers of subsidiaries. In 2018 Greenhaven paid Colony about $1.4 million in rent — nearly a third of the facility’s revenue that year — while facing a state revocation notice for years of violations, including untrained staff administering medications, insufficient dementia care, and neglect. In February 2019, 100‑year‑old Mildred Hernandez wandered out of Greenhaven at night without proper exit alarms; she was found under a bush in near‑freezing temperatures and died of hypothermia. Frontier Management, which Colony had hired to manage Greenhaven, denied liability and settled with the family. At trial, DigitalBridge argued operations were Frontier’s responsibility; jurors nevertheless awarded Hernandez’s family $110 million: $10 million compensatory and $100 million in punitive damages split between DigitalBridge and an asset manager.
– CareTrust, which bought City Creek in 2019, reviewed regulatory surveys and quality ratings as part of its oversight, according to deposition testimony. State inspections in 2020 documented egregious lapses at City Creek, including a resident left “wet from head to toe” for more than eight hours and a nurse observed reapplying a dirty diaper after wound care. Darby’s family alleged the facility failed to reposition her and to promptly order skin‑protective devices; a blood test found bacteria in her bloodstream from fecal contamination of open wounds, and she was diagnosed with sepsis before returning to the facility for comfort care and dying two weeks later. CareTrust and the operator Kalesta Healthcare denied the allegations; a judge allowed a jury to decide whether CareTrust exercised actual control, and the case settled confidentially.
Financial incentives and margins are striking. Strawberry Fields reported net income of $33 million from $155 million in rent (about a 21% margin). CareTrust, which now owns more than 500 senior housing and nursing home buildings, reported $320 million net income from $476 million in rents and other revenue — a 67% profit margin, far higher than large for‑profit health systems’ typical margins. Critics say such profits indicate capital is available but not being directed to frontline care. “There’s plenty of money,” said Lesley Ann Clement, one of Darby’s lawyers. “They’re just not spending it on patient care.”
REIT executives and industry groups often argue the arrangements bring capital and stability. Nareit and some REIT analysts say landlords help invest in aging facilities that otherwise could not afford upgrades. REIT spokespeople emphasize they are property owners and not involved in day‑to‑day clinical decisions, and that operators are licensed and regulated by states. Some REITs have also responded to poor performance by replacing operators. But plaintiffs’ attorneys and researchers say leases, occupancy requirements, and close financial scrutiny give landlords leverage that can contribute to decisions prioritizing revenue over staffing and patient outcomes.
Regulatory gaps complicate oversight. Because landlord identities and rent arrangements aren’t routinely disclosed to federal regulators — and because a key disclosure rule was suspended — it can be difficult for policymakers, families and researchers to trace how financial relationships between REITs and operators affect care. Lawsuits and investigative reporting have forced some scrutiny, producing large jury awards and confidential settlements, but enforcement and transparency remain limited.
Families like Darby’s and Hernandez’s say the consequences can be deadly. Plaintiffs’ lawyers argue that when profit-driven landlords and operators prioritize occupancy and cash flow, vulnerable residents may face understaffing, inadequate care, and preventable harm. REIT defenders counter that investors provide necessary capital and that operators — not landlords — bear responsibility for clinical care; courts and juries are increasingly weighing those competing claims in major verdicts and settlements.