Sacramento, California — By the time Pearlene Darby was rushed to a hospital in 2020, she had open sores on both legs, both hips, and both heels — and a five-inch gash on her tailbone. The retired teacher died two weeks later from infections and bedsores. She was 81.
Her daughter sued the nursing home. But the lawsuit didn’t stop there. It also named the building’s owner: a real estate investment trust, or REIT.
Court records showed that in the year Darby died, the Sacramento facility paid CareTrust REIT more than $1 million in rent — while the nursing home itself ran a deficit. And those same records revealed something that might surprise anyone who assumed REITs were just passive landlords: CareTrust had chosen the nursing home’s management company, required the facility to keep at least 80% of beds occupied, and tracked granular monthly spending on nurses and food. It monitored government inspection findings and Medicare quality ratings.
Both CareTrust and the nursing home operator denied liability for Darby’s death. The case settled on confidential terms. CareTrust’s corporate counsel said in a written statement: “We are the property owners, not the operators.”
Invisible Landlords, Outsized Influence
A sweeping investigation published Tuesday, drawing on court filings and corporate records across multiple states, found that REITs now own a fifth of the nation’s senior housing and hold investments in roughly 1 in 6 nursing homes. Publicly traded health care REITs are now worth nearly a quarter of a trillion dollars, according to industry data.
The investigation found that these landlords — despite insisting they don’t run facilities — often select the managers who oversee daily operations, and frequently leave those managers in place even when they’re aware of staffing shortfalls, repeated safety violations, or governance failures.
In March, a California jury awarded $92 million in punitive damages against a former REIT over the death of a 100-year-old resident with dementia who froze to death outside her assisted living facility.
“The REITs are in charge,” said one of the lawyers who represented Darby’s family.
A Regulatory Blind Spot — Made Worse Under Trump
Despite their reach, REITs remain invisible to federal and state health regulators. Nursing homes aren’t required to disclose rent payments or landlord identities in the annual reports they submit to Medicare.
Under the Trump administration, the Centers for Medicare and Medicaid Services indefinitely suspended a Biden-era rule that would have required nursing homes to disclose REIT involvement. CMS said it doesn’t regulate facilities based on their corporate structure — only on the quality of care they provide.
Critics say that logic misses the point. When a REIT tracks nurse staffing levels month by month while collecting rent from a facility running in the red, the line between landlord and operator starts to blur. The investigation found that some REITs replaced struggling operators — hardly the behavior of a hands-off property manager.
Research on the issue is mixed. One study found REIT-owned nursing homes spent more on nursing wages. Two others found worse outcomes: more frequent replacement of registered nurses with lower-skilled aides, and worse health inspection results after REIT investment. A separate analysis tied REIT deals to hospital closures and bankruptcies, with private equity investors pocketing sale proceeds while facilities were left carrying new rent burdens.
The push for transparency isn’t only coming from researchers. State lawmakers in several states have been moving to force nursing home ownership disclosure requirements in response to exactly this kind of layered corporate structure.
For families trying to evaluate a nursing home’s quality, none of this is easy to find. The investigation identified chains where the REIT’s CEO and one of its directors jointly own the operating company inside the same facilities — yet federal regulators have no formal mechanism to track or respond to that conflict.
“Given government funding often falls short, REITs have been valuable partners in helping to invest in long-term care,” an industry group said in a statement — without addressing the accountability gap the investigation documented.
For families of residents like Pearlene Darby, that answer isn’t enough.
