Many people’s investment portfolios include a real estate investment trust (REIT). These allow individuals to invest relatively small amounts of money in commercial properties.
Over the past decade, REITs have been investing substantial amounts of money in nursing homes and other care facilities. According to the National Association of Real Estate Trusts (Nareit), REITs own about 20% of all senior housing in the U.S., including memory care and assisted living facilities, and are invested in about 16% of nursing homes.
It may sound risky for an investment trust to own properties where elderly, sick and disabled residents depend on good care. Unfortunately, that too often is the case.
Government regulation of direct REIT involvement is lacking
Under federal tax regulations, REITs are prohibited from directly managing any kind of health care facility. However, in reality, some have assumed more of a role than they should or than they state publicly. Further, the Trump administration suspended a rule put in place by the Biden administration that required nursing homes to disclose who this data.
However, direct REIT involvement in day-to-day operations can go undetected until something goes horribly wrong. A recently published study by KFF Health News looked at documents from lawsuits filed by family members (including a number in Cook County) of elderly people who were seriously and sometimes fatally injured.
The study found that some REITs choose the management companies that run the facilities and establish rules like what percentage of beds must be occupied and how money is spent. Some overlook issues like staffing shortages and safety violations.
The victims included a 100-year-old woman who froze to death after she wandered outside her facility in the middle of the night. Another elderly woman who died had infected bedsores and other injuries “that no one could explain,” according to one of her children.
Even when a nursing home is found liable, collecting what in some cases have been multi-million-dollar settlements from a REIT can be challenging, as they often claim that they’re simply acting as a landlord.
Certainly, no one wants their loved one to suffer neglect or abuse in a care facility. If there are signs that this is happening, it’s wise for families to speak up sooner rather than later. If a loved one has been harmed, getting experienced legal guidance as early as possible can help families seek justice and compensation – and perhaps help others in the process.