This story is part of your SHN+ subscription
The relationship between senior living providers and their capital partners, often real estate investment trusts, private equity or high-net worth investors, is dramatically changing.
Pairing with a larger company or REIT can unlock new growth opportunities and resources that operators would not otherwise have on their own. After years of misaligned goals and expectations, operators and their ownership partners are in 2025 navigating a two-way street to gain strategic alignment, transparency and make progress on their long-term objectives.
“We want to be at the table talking about future growth with our ownership partners, not just about a current deal we’re executing on,” said Agemark Managing Director Matt Rezkalla. “If we’re aligned, we won’t have any surprises and set up a path for future opportunities to scale.”
Establishing clear expectations from the start of an owner-operator relationship, combined with shared value alignment and vision now create the foundation these pairings rest upon. These evolving relationships are now fueled by higher data and analytics reporting standards to drive operating performance or quickly shift strategy if challenges emerge.
Operators including Agemark Senior Living, Discovery Senior Living, Distinctive Living, Phoenix Senior Living, SRI Management and Stellar Senior Living are building more durable relationships with their capital partners on better data reporting and finding new strategies in operations to improve financial performance.
Moving beyond ‘basic data’ to drive strategy, performance
In the wake of the Covid-19 pandemic, senior living operators adapted to challenges by implementing new technology, evolving staffing practices and shoring up operating models to accommodate rising acuity. Some operators saw an opportunity to work more closely with their ownership partners for additional capital to support these changes, a practice that led operators to their current position.
“There’s been a clear shift toward requiring operators to deliver real-time insights, multidisciplinary expertise, local knowledge, and the ability to adapt quickly to market conditions and operational pressures,” said Discovery Senior Living CEO Richard Hutchinson.
Operators with institutional capital partners now are wielding data dashboards able to translate operating performance metrics, and quickly replace end-of-month reporting summaries. This has changed expectations from ownership groups that now expect either daily or weekly insights into an operator’s ongoing performance.
“It’s not only tracking and following trending data, that’s become pretty basic,” said Distinctive Senior Living CEO Joe Jedlowski. “We’re sharing reports in nearly real-time instead of waiting for the trailing financials.”
Freehold, New Jersey-based Distinctive has grown steadily since 2022, acquiring Validus Senior Living last year along with establishing a new, 14-community management relationship with Toledo, Ohio-based REIT Welltower (NYSE: WELL). In total, Distinctive oversees a portfolio of over 45 communities in 11 states.
To support growth, Distinctive added a data and analytics team in an effort to give community-level teams insights to improve operations, while also being able to more accurately report data to institutional partners like Welltower, Jedlowski said. But it’s a two-way street as institutional partners can provide additional market intelligence or insights from other operators in their SHOP bullpen.
“Capital has become more collaborative, but also more sophisticated and the expectation is that also the operators become more sophisticated,” Jedlowski said. “We’re doing deep dives into our rates, rate integrity and we’ve changed operations based on what the data is telling us, and that’s what capital is expecting.”
While obviously “margins still matter,” operators are now tracking a kaleidoscope of other data points to gauge financial performance, including move-in traffic, employee retention and resident satisfaction, according to Stellar Senior Living Senior Vice President and Co-Founder Adam Benton. Operators also are tracking detailed workforce data and clinical compliance more closely now more than in the past, multiple senior living leaders told SHN.
Midvale, Utah-based Stellar Senior Living recently sold two properties to Welltower and retained management of the communities. The company relies on a mix of institutional capital and private investment following a $25 million equity and joint venture investment structure last year.
“Owners want to know you’re building sustainable momentum, not just cutting costs to meet a quarter,” Benton said.
Tallahassee, Florida-based SRI Management has added 13 communities to its management portfolio since 2023, nearing 60 communities through its third-party management growth strategy. The company’s recent growth is made possible by rapidly evolving its data collection and analysis capabilities, an effort that started nearly a decade ago, according to SRI Management CFO Seth Walker. The company has moved from manually created reports to automated reports, saving time and allowing community leaders to spend more time with residents.
With its data model, SRI’s patchwork of ownership relationships has grown, from institutional partners including Ventas (NYSE: VTR) and investment management company Blackstone (NYSE: BX) along with private investors. This is all in the effort of ensuring SRI communities are able to support future growth by having robust back-office functions.
“Data collection is number one,” Walker said. “Large ownership groups are asking for more data and looking for ways to benchmark their operators against one another to leverage what types of intel can lead to better outcomes.”
Staffing support, regional prowess building blocks of successful partnerships
Insights from a large data model are important, but useless without the staff to carry out changes based on those insights. Executives told SHN their companies typically hold weekly and impromptu check-ins as-needed related to improving bottom line performance, representing a change from the past.
Ownership groups now ask for more insight into daily operations, prompting operators to cross-train staff and lean into understanding a community’s local market presence. For example, Discovery created performance optimization teams, a health care quality division and specialized support units to support more dynamic operations and reporting expectations up to investment partners, according to Hutchinson.
“Today’s capital partners want to understand the ‘why’ behind the numbers,” Hutchinson said. “While NOI and occupancy still matter, there’s greater focus on leading indicators such as staffing stability, clinical quality scores, sales conversion efficiency, and resident wellness metrics.
Last year, Bonita Springs, Florida-based Discovery created the Discovery Management Group and orchestrated a new credit facility with Comvest Credit Partners in what Hutchinson described as the company’s “big, final push” in its restructuring.
The effort follows Discovery’s horizontal growth push where it launched multiple regional operating companies over the last two years. Discovery manages 37 properties on behalf of Welltower spanning over 5,100 units, according to financial data provided by Welltower as of the first quarter 2025. Overall, Discovery manages over 350 communities nationwide across various regional operating brands.
Today, operators must become “true innovation partners” with their ownership groups, able to bring local market insights and new operational practices to bear. When onboarding a new community from a capital partner, Discovery deploys transition teams to handle all aspects of operations, from licensing to technology integration. This allows frontline operational teams to focus on “tactical plans” following the initial onboarding and deliver quality care and lifestyle services, Hutchinson said.
Being a strong regional operator will help make operating companies more attractive in the future for institutional investment, Phoenix Senior Living CEO Jesse Marinko said.
The Roswell, Georgia-based provider oversees 46 communities, 23 of which are owned by Diversified Healthcare Trust (NASDAQ: DHC). Marinko believes “super-regional” operators able to leverage scale and market density to improve operating performance are better-positioned to work with large institutional partners.
“The emergence and consistency of a regional operator has become very apparent to them,” Marinko said.
The future of owner-operator relationships, avoiding ‘Office Space’ culture
While there’s upside in these large institutional relationships, sometimes friction points can cause these partnerships to fizzle out. But there are some early warning signs a relationship might not be a good fit.
Too much daily involvement from ownership groups could create an environment akin to the toxic culture portrayed by actor Gary Cole’s character Bill Lumbergh in the 1999 film “Office Space”: Excessive monitoring and an obsession over details while removing employee autonomy, Walker said.
“It’s usually a red flag that something is going sideways when owners want weekly calls or they start talking directly to folks at the community level and that’s an indicator that there’s a level of trust issue there,” Walker said.
That could include capital groups being restrictive with information, something that “doesn’t create a sense of partnership,” between groups, Rezkalla said. This year, Agemark started a new partnership with National Health Investors (NYSE: NHI) after the REIT partnered on financing for six memory care communities with Agemark as the operator. This comes as the company named its top leaders and charted new growth for 2025 and beyond.
Other strain to these relationships can also come from micromanagement by ownership in daily operations, Benton said, combined with a lack of trust or “unwillingness to take the long view” of a partnership’s future potential.
“If I have an owner that just doesn’t get it, doesn’t check in and only calls me to punch me in the face, that’s not something to get excited about,” Marinko added. “You need collaborative conversations to work through challenges that come up. It’s corny, but it truly is all about communication.”
Misalignment in expectations or a breakdown in communication can create the greatest challenges to ownership-operator relationships, Hutchinson said, forcing operators to create dashboards that are easily accessible for capital partners without disrupting “complex realities on the ground” at the community level.
“Management company presidents are key operating leaders who are relationship managers to specific portfolios,” Hutchinson said. “This ensures continuity, speed of communication…This structure has helped us avoid many of the common pitfalls that can delay action or erode trust.”
In the future, senior living and ownership relationships will continue to evolve, leaders told SHN. Marinko sees the future of these relationships hinging on regional prowess brought by operators with strong employee rosters able to drive performance.
Avoiding challenges, improving sophistication of operating models has created a “new wave” of “how you operate senior housing in 2025,” Jedlowski added. Best-in-class owner-operator partnerships will resemble operating companies with “shared governance,” along with more tech-enabled collaboration, Benton noted.
“The truth is, most capital partners don’t just want an operator, they want a problem solver. What happens behind the scenes during crises, regulatory audits, or unexpected turnover matters more than what’s in the monthly report,” Hutchinson said. “Ultimately, it’s the quiet competence and culture of execution that sustains these relationships long-term.”
