The SeniorCare Investor: M&A Market Beats 2009--
Number Of Deals And Dollar Volume Set To Top Last Year
There always seems to be a year-end rush to close transactions, and 2010 will not be an exception. Last year, the number of publicly announced seniors housing and care deals in the fourth quarter was double the number in the third quarter, and the dollar volume was three times the total for the first three quarters combined. Part of the problem a year ago was that deal volume early in the year was stymied by the recession and the lack of capital to consummate the transactions. Capital is flowing a little more freely today, and buyers are actually getting more aggressive. The other good news is that we are starting to see higher quality properties coming onto the market, which is allowing buyers to get more aggressive and giving lenders more comfort with the quality of the existing cash flow.
In the first three quarters of 2010, there were about 70 publicly announced transactions in our sector (49 in the same period in 2009), with a value of just over $2.2 billion ($795 million in last year’s three quarters). For the full year in 2009, the dollar volume was $3.2 billion, but this level was already passed this year in mid-October, and even without a very large deal before year end, we should be close to $6.0 billion for the year, or the most active year since 2007. And from what we hear around the market, the number of expected transactions in December is high enough to take the fourth quarter’s activity above last year’s fourth quarter, which was an active 40 announced transactions. That would mean this year’s fourth quarter could be the most active quarter since the first quarter of 2007 (43 deals), when the acquisition market was peaking. Now that would put a positive spin on the end of the year.
It hasn’t hurt the market psychology that we have had two announced transactions above the billion-dollar mark so far in 2010, sizes we haven’t seen since 2007. While both of these were somewhat unique, and both involved assisted and independent living communities, they have opened some eyes, and maybe some wallets, for what looks to be a more liquid market going into 2011. Last month, we reported on a mini-surge in assisted living transactions. This month, the skilled nursing sector is taking center stage... Want to read more? Click here for a free trial and download the current issue today