Reits Kickstart Active Year For Senior Living M&a, Driven By Shop Strategies

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Senior living REITs are taking their M&A momentum into 2026 with new deals or expectations to grow this year. If their stated plans are any indication, it will be another hot year for senior living dealmaking, but new development remains a big open question.

In earnings calls over the past two weeks and during subsequent investor meetings, leaders of REITs including Ventas (NYSE: VTR), Welltower (NYSE: WELL), National Health Investors (NYSE: NHI) and LTC Properties (NYSE: LTC) all discussed the road ahead with regard to growth in 2026. It came as no surprise to me that their plans this year mostly center on expanding their senior housing operating (SHOP) segments and improving properties they currently own, given the fact that REITs have sought out those deals for substantially the last year and a half.

REITs such as Ventas and Welltower have in recent years paired their growth with support and data insights for operators, and now, at least one senior living REIT, Welltower, is exploring monetizing its business intelligence platform for use in other industries as part of a new deal with self-storage REIT Public Storage (NYSE: PSA), and another similar one with a private equity firm seeking out medical office properties.

Helping to drive all of this is the fact that development is still largely in the same spot it was last year. I still hear from senior living companies that the projects that can justify higher rental rates, and therefore higher development costs, are penciling out, while most others are either stuck in limbo or haven’t passed the starting line.

Putting the pieces together, I think REITs are still in the same advantageous spot they were last year in that they see plenty to buy and integrate into their SHOP segments, and they feel relatively little pressure to build anew. As I analyze the current landscape for senior living owners, Welltower CEO Shankh Mitra’s recent words of warning about the challenges of such deals are still echoing in my mind. But the financial math of M&A still is favoring REITs and other deep-pocketed companies in 2026.

In this members-only SHN+ Update, I analyze recent earnings calls and other disclosures from REITs to offer the following takeaways:

• The REIT SHOP-ping spree shows no signs of slowing down
• Why Welltower’s new partnership could be a new revenue opportunity for REITs
• REITs still aren’t talking about new development

REITs continue aggressively targeting SHOP

In the beginning of 2025, I wrote that the REIT SHOP-ping spree was picking up. Since then, the trend hasn’t slowed down.

In 2026, substantially every major senior living REIT has indicated that they plan to go even bigger on their SHOP segments in 2026. Chief among the REITs growing their respective SHOP segments are Ventas and Welltower.

Welltower is leading that pack with $11 billion in net investments for the full year of 2025 alone, a total that includes acquisitions of more than 900 senior living communities. In February, Welltower management noted the REIT had an additional $5.7 billion of deals closed or under contract to close this year and executed 37 transactions in the first six weeks of 2026 alone.

Currently, 59% of Welltower’s cash flow stems from its senior housing operating portfolio, but REIT is seeking to grow that share to 72% in the future while increasing its total exposure to senior housing to 85% in that time. Coupled with a $1.3 billion sale of its share of a skilled nursing joint venture investment in Integra Health, these moves are helping to transform the REIT into “a pure-play SHOP REIT,” wrote BMO Capital Markets analysts Juan Sanabria and John Kim in a Feb. 10 note to investors.

Ventas is heading down a similar path as Welltower this year, though with a smaller – albeit still large – target for investments. The Chicago-based REIT has so far this year closed about $800 million worth of deals with a full-year investment target of $2.5 billion. As of the end of the fourth quarter of 2025, SHOP comprised 53% of the company’s annual net operating income (NOI).

Looking ahead, Ventas Chief Investment Officer and Executive Vice President of Senior Housing Justin Hutchens said the REIT is “very confident that we’re well positioned to continue to compete and find external opportunities.”

“Most of what we’re buying is going to be owned by friends and family, private equity or pension and therefore, a good fit for our SHOP structure,” he said during a March 3 presentation at the Citi 2026 Global Property CEO Conference. “We are seeing an opportunity to make an acquisition, have a well-aligned management agreement with the managers which is compensating for both NOI and revenue growth and paying for outperformance, and then layering on the OI platform.”

Multiple other REITs are chasing SHOP deals in 2026. Among them is NHI, which is reinvesting in its 26-property SHOP platform; and LTC Properties, which is “aggressively” growing its SHOP segment with a target to increase it to approximately 45% of the company’s overall portfolio and account for 40% of the company’s net operating income by the end of this year.

Putting all of these pieces together and analyzing the opportunity of the last two years, it’s not hard to see why REITs are targeting SHOP for more investments. As I wrote in February, I do think that these companies should heed the warnings of others like Welltower CEO Shankh Mitra that the RIDEA deals that typically underpin SHOP segments are not as easy as they might appear. As it has grown, Welltower has built a slate of support for operating partners that includes data insights and machine learning, all with the goal of making better capital allocation and operating platform decisions.

Looking across the industry, Welltower isn’t the only company that has these capabilities. As Hutchens alluded, Ventas has its OI platform that fits into its “right market, right asset, right operator” strategy. NHI and LTC Properties are of course not newcomers to supporting their operating partners, either.

But in the end, I think that REITs must advance their data and insights capabilities to drive SHOP success, and not just “write checks” as Mitra noted.

Data and back-office support: REIT as tech company

Separately from REITs’ SHOP growth, I found it interesting that Welltower also is monetizing the data and machine-learning capabilities that the company has built in the last decade. I think this could represent a new service line for REITs with those kinds of capabilities.

During a March 3 presentation at the Citi 2026 Global Property CEO Conference, Welltower Co-President and CIO Nikhil Chaudhri said that the decision to license the company’s proprietary software was driven by “economics” — and a belief that the REIT can tap into the “untapped value” of its internal processes.

When Welltower was spinning up its private wealth management business last year and fundraising for it, “some of the largest wealth funds in the world” – one of them a “prolific” AI investor – asked if the company could apply its internal process for market and property selection into other kinds of businesses and asset classes, Chaudhri said.

“Let’s see where this goes, but it’s an asset on our balance sheet that has created substantial value for our shareholders,” he added. “There is a potential that there is significant incremental value to be captured from that.”

Ventas has similar capabilities with its OI platform. Although I am not familiar with either platform on a granular level, I suspect they accomplish similar things with regard to selecting the right market and sites based on data insights.

As Chaudhri said, Welltower’s foray into licensing its processes for other industries is still an early effort. But the fact that he sees value in the company’s internal processes tells me that other REITs might, too. I’m reminded of how some senior living providers – Atria and Asbury come to mind – have leveraged their proprietary technology for revenue or even spun out separate tech businesses. And this could be another milestone in the story of how Welltower has been on the forefront of expanding the scope of the REIT business, after being a RIDEA pioneer (striking the first such contract in senior living, with Merrill Gardens) and getting the IRS green light to self-manage independent living units.

Development math still not math-ing

For all of REITs’ recent discussion of acquisitions, they are still not keen on the financials of new development.

As Mitra told me last year, many projects just are not penciling out due to the hard financial math of underwriting these communities. A mix of conditions – including difficulty accessing dollars for new projects, a high cost of construction and a low cost of acquisitions versus replacement – has sent development plummeting in recent years.

New senior housing inventory growth remained below 1% of total inventory for the third consecutive quarter in the fourth quarter of 2025, when stakeholders opened just 1,900 new units.

The senior living industry desperately must add more units in order to meet demand in the years ahead. But in 2026, the math still is not math-ing – at least, that was Chaudhri’s sentiment during the recent Citi conference.

A developer that puts $40 of equity into a project “needs to be able to sell the asset for $140,” he said.

“That’s the first and foremost thing: the economics don’t pencil, and that’s why people are not doing it,” Chaudhri added.

Mitra added that, contrary to what he has heard from some others, “there is no evidence of construction costs in senior living coming down.”

“In fact, the evidence is the exact opposite. Construction cost escalation is between 4% and 5%,” he said.

Even assuming flat construction costs, Chaudhri said that “at today’s dollars, you need deal economics to be 30% or 40% better for development to pencil.”

Bottom line, although we’re only three months into 2026, the signs unfortunately do not look good for a significant development comeback this year.

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