Seniors Housing Weekly Update - Seniors Housing M&A Activity Stronger Than You Think

July 24, 2012


 

July 24, 2012. 60 Seconds with Steve Monroe. Acquisition volume in the first half of 2012, as measured by number of deals announced, is very close to the volume in 2011........

 

Seniors Housing M&A Activity Stronger Than You Think
So here we are, just past the mid-point of the year in what most people have thought was a pretty slow seniors housing acquisition market. What people have been ignoring is that the hype in last year’s market was created by the half dozen or so very large transactions, pretty much all involving REITs. In the first half of 2011, there were just over $14 billion of announced acquisitions, and this compares to just $3.6 billion in the first half of 2012. That looks pretty depressing when viewed as a 75% plunge in M&A activity, when measured by dollars spent. But when you look at the number of transactions, there is a very different story. In the first half of last year there were 84 announced deals, and in the first half of this year there were 76. This represents just under a 10% decline, which is a much different story than the 75% drop in dollar value. So yes, the mega deals of last year have mostly disappeared, for now, but the actual deal flow has been much stronger than most people have thought, and still running way ahead of both 2009 and 2010.  Expect a deal surge to hit in the 4th quarter. 

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Surging M&A Activity

Hi Steve - The number of transactions in 2012 could potentially exceed 2011. What is holding it back is the interest in selling as there are more buyers in the market then sellers. With the looming capital gains tax increases on the horizon, we anticipate a strong second half of 2012 across the continuum of care. Jonathan Sadock Managing Partner Paragon Ventures LLC

M&A Activity

Yes, I agree that a large percentage of the fourth quarter M&A activity will be capital gains tax related. But what does surprise me is that with borrowing rates so low, and cap rates for "A" properties quite low, there aren't more sellers thinking that they are going to get great prices for their A properties AND selling with the lowest capital gains tax rate ever.

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