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For years, REITs and their working companions have sought “alignment” in nearly all they do collectively. Now, a REIT is definitely doling out financial incentives for not solely its operators, however the precise staff of their communities.
The REIT, Welltower (NYSE: WELL), final October introduced the Welltower Fellowship Grant. By way of the grant – which is within the title of the late businessperson Charlie Munger, “a person who meant a lot” to Welltower CEO Shankh Mitra and the corporate’s administration crew – the REIT will award frontline staff on the top-10 performing communities in its portfolio with shares from a pool price $10 million.
Though REITs have lengthy incentivized their working companions with bonuses or larger administration payouts for good efficiency, that is the primary time I’ve seen a REIT try and bridge the hole between the incentives of possession and the work of the folks really enterprise the work of senior residing.
“It exhibits an appreciation for many who are carrying the baton each day to ship the care and the providers to that resident,” Welltower Government Vice President and Head of Company Improvement John Olympitis instructed me. “Our working companions do an outstanding job at incentivizing their workforce … however so as to add this carrot on prime of it, we predict supplies a better incentive to work at a Welltower neighborhood.”
Amongst Welltower’s working companions is StoryPoint, an operator that manages dozens of communities for the REIT. StoryPoint CEO Dan Hughes instructed me that the brand new incentive program is the primary of its variety that he’s seen in senior residing and mentioned a inventory award of that nature could possibly be vital to staff. As such, he’s “laser-focused” on enhancing operational outcomes on the firm’s communities in order that extra staff could be eligible for the award.
“We wish to make sure that we put all of our folks in the very best place to make the most of this chance, and that’s what we’re centered on proper now,” Hughes instructed me.
Zooming out the lens, I believe Welltower’s effort to reward frontline staff is notable given how usually its executives discuss the necessity to incentivize higher efficiency of their communities, and the way laborious that’s to realize that from a company workplace with restricted attain into operations.
Whereas a REIT is basically only a tax construction on paper, senior residing is an operational enterprise that extends far past actual property. REITs and operators have generally struggled to search out alignment on senior residing operations, and I consider that is because of a scarcity of frequent incentives. By straight linking operational outcomes like resident and worker satisfaction with the REIT’s inventory, Welltower is beginning to bridge that hole.
On this members-only SHN+ Replace, I analyze my latest interviews with Welltower and Storypoint executives and share the next takeaways:
- How the brand new grant program seeks to align possession with frontline staff
- Inside Welltower’s Costco inspiration
- Extra on the way forward for owner-operator alignment
New grant straight aligns REIT, staff
On the coronary heart of the brand new Welltower grant is a want to higher align a REIT with the folks really offering care in its communities. Publicly traded REITs like Welltower should on the finish of the day be stewards to a share value, whereas operators should be stewards of their residents. However good resident care doesn’t all the time present up in an organization’s inventory value; and a excessive share worth doesn’t all the time sign excellent care.
For a few years, the connection between a REIT and an operator was largely transactional. REITs can not straight function their communities by regulation – with out flexibilities from the federal authorities, anyway – and thus are considerably restricted in what they’ll do to straight have an effect on neighborhood efficiency.
However that started to vary with the rise of the RIDEA construction within the mid-2000s. REITs used the construction to take a extra outstanding position in neighborhood operations, and it grew to become normal within the years that adopted. Quick-forward to 2026, and the RIDEA construction is embraced not solely by Welltower however considerably each senior housing REIT within the nation as they search to develop senior housing working portfolios with companions which have “pores and skin within the sport.”
Welltower has frequently tweaked its RIDEA construction – now on its sixth iteration – to align operations with its possession objectives within the final decade. The Fellowship Grant is yet one more method to try this.
With the grant, Welltower is aiming to extra intently align what it cares about with the cares of its operators. The REIT has put aside $10 million yearly in inventory to compensate front-line workers on the REIT’s top-10 performing communities. Welltower is grading its working companions on two predominant KPIs: resident and worker satisfaction.
An worker who will get the grant should maintain it for a yr earlier than promoting it, subsequently creating “an amazing incentive to not solely work in a Welltower neighborhood, however keep,” Olympitis mentioned.
Beneath the grant, an worker might get an award that doubles their compensation for the yr. That’s a “life-changing” quantity for a senior residing employee, Hughes mentioned. And the grant is the primary of its variety for the trade, he added.
I just lately caught up with Olympitis and Amanda Sweitzer, senior vice chairman of capital markets for Welltower. They instructed me the corporate has taken inspiration from the likes of Costco when occupied with methods to incentivize higher efficiency of their communities, from higher break rooms to now, the Fellowship Grant.
“A whole lot of it comes right down to how Costco incentivizes and creates a tradition for his or her frontline workers,” Sweitzer instructed me. “We very a lot look to leaders like Costco which have traditionally compounded monetary outcomes over time on account of their worker satisfaction.”
Welltower is spinning up the grant towards a backdrop of excessive demand however tight labor situations. If the corporate and its companions hope to take care of the hundreds of thousands of boomers getting older into senior housing within the years to come back, they may want the employees to take action.
“This trade is rife with worker turnover, and the most effective methods to enhance resident satisfaction and affected person care is to decrease the turnover of staff to guarantee that that resident is getting cared for by the identical worker over a protracted time frame,” Sweitzer mentioned. “All of it ties along with how we’re occupied with enhancing the general expertise inside our communities.”
With the grant, Welltower additionally is considering the trade’s subsequent 5 to 10 years forward.
“We have now two finish constituents, the residents and the workers. And there is a component of gross sales and retention and size of keep and size of service that’s parallel to each,” Olympitis added.
Grant hints at way forward for senior residing owner-operator alignment
I consider the brand new grant is critical in that, for the primary time ever, it’s bringing REITs and operators collectively beneath a shared incentive. By giving frontline staff shares, they’re actually invested within the REIT’s monetary efficiency. And by providing a grant payable to frontline staff, the REIT has a brand new software to straight incentivize higher operations.
In 2026, because the SHOP-ping spree continues amongst REITs, I consider extra of them will search for extra artistic methods to incentivize efficiency amongst their companions. Whereas REITs have a large number of carrots (and sticks) to inspire their working companions, I consider they’ve struggled to make use of these instruments with the folks really offering care in senior residing communities.
Welltower’s new grant might present a roadmap for different REITs to equally discover methods to share success with folks offering care on the entrance traces. Doing so might probably help the trade’s dire staffing forecast forward as operators should rent scores of recent staff within the years forward.
In fact, all of that is depending on a inventory value that doesn’t considerably fall. I can see a state of affairs the place an worker will get a reward solely to search out it has depreciated considerably since once they received it. With a share value of greater than $183 as of the time of writing this text, Welltower’s inventory is almost at an all-time excessive. Nonetheless, I believe that applies for any worker inventory award. And on the finish of the day I believe the aim of the grant itself eclipses any potential roadblocks forward.
