Welltower, a $32B REIT that owns senior housing and healthcare real estate, may be under more financial distress than its public statements have indicated, a new short seller report alleges.

The report, released Wednesday by Hindenburg Research, alleges that Welltower has at least twice offloaded troubled asset portfolios onto a management firm with no discernible experience in the industry in order to mask losses.

"Instead of being transparent about its situation, Welltower’s management has obfuscated the issues through a shell game, while claiming that the deals will magically result in more cash rent or asset recovery than before," the report said.

According to the report, Welltower transferred a portfolio that accounted for 12% of its net operating income to a joint venture with operator Integra Health, which appears to have been founded in 2022 and is led by David Gefner, according to his LinkedIn profile.

Hindenburg said Integra has no employees on its LinkedIn page, though it appears to now have three including Gefner. A previous report in the Philadelphia Inquirer found that industry veterans had no knowledge of Gefner or Integra.

Despite Integra's unknown status, Welltower asserted that the joint venture would lead to a 4% cash rent increase in its latest financial reports.

Welltower didn't respond to a request for comment on the report from Bisnow.

Integra was called in to manage a portfolio of 147 nursing homes that were formerly operated by nonprofit healthcare provider ProMedica, which the Inquirer reports lost $316M in the first nine months of 2022.

Hindenburg said the deal isn't the only suspect transaction involving Gefner. In late 2021, Welltower sold 21 assets formerly operated by Genesis Healthcare to a firm affiliated with Gefner. Genesis was the fourth-largest operator in Welltower's portfolio, and at one point Gefner's firm shared an office suite with Genesis, according to Hindenburg.

Welltower had also previously used ProMedica to replace Genesis at nine locations, according to the Inquirer.

Welltower trades at a premium compared to its peers in the senior healthcare space, Hindenburg said, despite facing the same troubled market fundamentals.

The REIT has also been active in the mergers and acquisitions space, making a $4.8B all-cash bid to merge with Healthcare Realty Trust earlier this year. Activist investor Jonathan Litt tried to force that deal through in June.

Welltower's stock price dropped by about 5% Wednesday morning following the release of the report.