October 29, 2018
NORWALK, CT–The number of publicly announced seniors housing and care acquisitions in the third quarter of 2018 topped 100 transactions for the second quarter in a row, with 103 total transactions announced, based on new acquisition data from Irving Levin Associates. That represents a slight decrease from the second quarter’s record-high 110 transactions but a 34% increase from last year’s third quarter total of 77 transactions. Dollar volume for the third quarter dropped to $1.72 billion, a 73% decline from the second quarter’s $6.46 billion.
REITs, as they restructure their portfolios and move away from the skilled nursing facility market, have been driving acquisition activity. At least 18 transactions involved a REIT as the seller. There were 20 portfolio deals involving 138 total properties in the third quarter, accounting for 19% of all sales. About 45% of the third quarter’s transactions involved the sale of skilled nursing facilities, with the remaining 55% coming from the private pay seniors housing side.
“Despite numerous headwinds including census, shortening lengths of stay and labor risks, investors in search of higher yields continue to flock to the skilled nursing market,” stated Stephen M. Monroe, Managing Editor of The SeniorCare Investor and Editor of The Senior Care Acquisition Report. “Minimal increase in supply, a 2.5% Medicare rate increase next year and the new PDPM reimbursement system have all contributed to the increased activity.”
Private owner/operators were the most prolific buyers of both skilled nursing and seniors housing properties this quarter, making 57% of the acquisitions and spending $494 million, or 29% of the third quarter’s total. In similar proportions to last quarter, private equity and private investors were responsible for 26% of the transactions, while REITs accounted for 12%.
“Abundant and relatively inexpensive capital sources have pushed many private operators into the acquisition market, investing in everything from assisted and independent living to active adult apartment communities. These transactions may not match the size of private equity or REIT deals, but they are largely responsible for the 100-plus transactions announced in each of the last two quarters,” Monroe added.
All quarterly results are published in The Health Care M&A Report for all 13 sectors of health care, which is part of the HealthCareMandA.com. In addition, results of the seniors housing and care acquisition market are published annually in The Senior Care Acquisition Report, a comprehensive report with more than 250 pages of transaction details and valuation statistics.