In 2020 Pearlene Darby, an 81-year-old retired teacher, arrived at a hospital with severe pressure sores and a large wound on her tailbone. She died two weeks later of infections and complications that her death certificate attributed to bedsores. Her daughter sued the Sacramento nursing home where Darby had lived, alleging staff left her in soiled bedding and failed to provide preventive care. The lawsuit named not only the operator but also the building owner, CareTrust REIT, and court filings show the facility paid that landlord more than $1 million in rent the year Darby died while operating at a loss.
Legal documents in the case describe a relationship in which the landlord selected managers, required an occupancy minimum in the lease, monitored monthly spending on nursing and food, and tracked state inspection findings and Medicare quality ratings. CareTrust and the facility operator disputed liability, arguing the REIT owned property but did not run clinical operations. The case ultimately settled on confidential terms.
Over the past decade real estate investment trusts, or REITs, have acquired thousands of buildings that house nursing homes, assisted living, memory care, hospitals and medical offices. Investigations and court records reviewed by KFF Health News and others show that landlords can exert substantial influence over operators in ways that families and regulators do not always see. In some instances REITs have chosen or retained managers for struggling facilities; in others lease provisions and financial oversight appear to push decisions that prioritize occupancy and cash flow.
REITs now own roughly one-fifth of the nation’s senior housing stock and have stakes in about one in six nursing homes. Publicly traded health care REITs collectively are worth near a quarter-trillion dollars, and Nareit reported these REITs paid more than $7 billion in dividends in 2024. At the same time, research on whether REIT ownership helps or harms patient care is mixed. Some studies found higher spending on nursing wages after REIT investment, while others documented reductions in registered nurse staffing and worse health inspection results following acquisitions.
The REIT business model helps explain why many landlords limit operational control on paper. To qualify for REIT tax benefits, a company must distribute most of its income and avoid the federal corporate tax; but a REIT that directly operates health care facilities can lose that tax advantage for several years. As a result, many REITs lease properties to separate operators. Those leases, however, often contain provisions—occupancy minimums, oversight of budgets and staffing levels, and approval rights for managers—that can give landlords leverage over day-to-day decisions without placing them on the license for clinical care.
Several high-profile cases illustrate how those relationships can play out:
– Strawberry Fields REIT controls more than 130 nursing home buildings. Two dozen of those facilities are operated by companies tied to executives who also own Infinity Healthcare Management. A KFF Health News analysis found Infinity-affiliated homes provided roughly an hour and 15 minutes less direct nursing care per resident per day than the national average of about four hours. Some of the homes have low Medicare ratings, and juries have awarded millions in damages in cases tied to serious injuries and deaths, including a $12 million verdict over a 2023 death related to infected bedsores.
– Colony Capital, later renamed DigitalBridge, owned the building for Greenhaven Estates while a separate management company ran the facility. In 2018 Greenhaven paid the owner about $1.4 million in rent—nearly a third of its revenue—while facing state notices for longstanding violations including inadequate dementia care and untrained staff administering medications. In 2019 100-year-old Mildred Hernandez wandered out of the facility at night without functioning alarms; she was found in near-freezing temperatures and died of hypothermia. The management company and the REIT stressed that operations were the responsibility of the manager, but a jury awarded Hernandez’s family $110 million, including large punitive damages split among the REIT and other parties.
– CareTrust, which acquired the City Creek Post-Acute and Assisted Living building in 2019, reviewed regulatory surveys and quality ratings as part of its oversight, according to depositions. State inspections documented severe lapses at the facility in 2020, including residents left in soiled clothing for hours and staff observed using unclean materials during wound care. Darby’s family alleged she was not repositioned or provided protective devices and returned to the facility once infected and septic; they argued the owner’s involvement in management decisions contributed to inadequate care. The operator and CareTrust denied wrongdoing, and a judge allowed a jury to consider whether the REIT exercised actual control; the case later settled confidentially.
Those examples underscore a central tension: the REIT model can bring capital for renovations and property upkeep, but it also creates financial incentives that sometimes favor steady rent payments and high occupancy over investments in frontline staffing or clinical quality. Financial statements show striking margins: one REIT reported net income of $33 million from $155 million in rent, while another reported net income of about $320 million on less than $500 million in rent and related revenue—profitability levels critics say are much higher than typical for-profit health systems.
Industry groups and REIT executives argue that landlords provide needed capital, help modernize aging properties, and that licensed operators remain responsible for patient care. They point to examples where landlords have replaced poor-performing operators. Plaintiffs’ attorneys, researchers and some regulators counter that lease terms, occupancy requirements and detailed financial monitoring can shape operational choices in ways that harm residents, especially when operators operate on thin margins.
Regulatory visibility is limited. Hospitals and nursing homes do not have to disclose landlord identities or rent payments in annual Medicare reports, and a Biden-era rule that would have increased disclosure of REIT involvement was suspended. The Centers for Medicare & Medicaid Services says its oversight focuses on quality of care rather than corporate tax status or ownership structures, but families, researchers and policymakers say the lack of transparency makes it hard to trace how financial arrangements affect outcomes.
For residents and their families the consequences can be profound. Lawsuits and investigative reporting have forced scrutiny and sometimes produced large jury awards and settlements, but they also highlight systemic gaps in transparency and enforcement. As courts and regulators continue to wrestle with where legal and moral responsibility lies, families who entrust loved ones to long-term care providers face a basic question: when a property investor owns the building and a separate company runs the care, who is accountable when care fails?