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When Tesla shareholders awarded CEO Elon Musk an unprecedented $1-trillion compensation package, it made international news (1) — and made him the top-paid CEO on the planet.
When Welltower awarded Shankh Mitra an equally jaw-dropping $821 million CEO package, it didn’t make quite the same splash (although it did get similar backlash (2)).
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But Mitra is focused on something a little more down to earth than building robo taxis and sending rockets into space: senior housing. And as the Wall Street Journal reports (3), he’s shown that it’s equally explosive.
Today, Mitra runs the world’s largest real estate investment trust (REIT (4)) — built entirely on senior-living communities. In just six years, he increased the value of Welltower (NYSE: WELL (5)) to $160 billion, and its shares skyrocketed from around $40 to more than $200.
That’s all the more impressive when you consider he gambled $40 billion of Welltower’s money to do it.
Mitra is not only in the same CEO class (6) as Musk, but he’s also a maverick who takes risks when he sees opportunity. And he saw an opportunity in COVID-19.
Timing the senior housing market amid the pandemic
Senior housing didn’t look like a great investment in 2020. Nursing homes and assisted living facilities were ground zero for many COVID-19 outbreaks, and, tragically, the site of 42% of pandemic-related deaths (7) in the U.S. that year.
Still, Mitra — a Columbia grad with an MBA (8) in Applied Value Investing — saw the need for such facilities. An estimated 2.1 million Americans lived in them at the time.
Mitra saw beyond the pandemic and also beyond the U.S. So he launched a $40 billion, six-year buying spree, snapping up thousands of senior housing units across North America and the U.K (9).
Today, Welltower owns 2,500 senior-living facilities offering everything from independent living to assisted living and memory care. While Welltower owns the properties, it lets its partners — multinational operators including Sunrise Senior Living and Atria Senior Living — run them.
The company’s holdings are concentrated in communities with dense populations of older adults who can afford higher-end, private-pay senior-living facilities.
The Wall Street Journal cites the example of one such property in Manhattan — Sunrise at East 56th — for which residents pay a minimum of $15,330 a month to live there.
Read More: 7 top habits of 'quietly wealthy' Americans. How many do you follow?
The (lucrative) future of senior housing
Last year, the National Investment Center for Seniors Housing & Care (NIC) reported (10) that senior housing was the most profitable of all real-estate investments, with year-to-date returns in the third quarter hitting 7%.
The oldest boomers are turning 80 this year, and demand for senior housing is soaring. Pricewaterhouse Coopers and the Urban Land Institute note that senior housing (11)occupancy rates are at record levels because there’s not enough inventory to meet demand.
Their research indicates the demand will continue to grow. The number of single adults 75-plus living alone is expected to more than double by 2040, adding to the need for caregiving.
It all makes Mitra’s COVID-era gamble look less like a gamble.
While his $821-million compensation package is contingent in part on the company meeting key performance targets over the next 10 years, the demographic indicators suggest they will.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
The Guardian (1); The Real Deal (2); The Wall Street Journal (3); Companies Market Cap (4); Nasdaq (5); The New York Times (6); Forbes (7); Columbia Business School (8); Welltower (9); Network Information Center (10); PwC (11)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
