Seniors Housing Weekly Update -- Seniors Housing Acquisition Market Remains Strong

July 9, 2013

 
July 9, 2013. 60 Seconds with Steve Monroe. There was a strong 25% jump in seniors housing and care M&A transactions in the second quarter compared with a year ago.

Seniors Housing Acquisition Market Remains Strong

There has been some warranted fears that with the recent uptick in interest rates, the seniors housing and care M&A market may suffer from pricing woes as well as reduced activity levels. While it may be too early to tell, the second quarter certainly had no problems. The number of announced transactions in our sector jumped by more than 25% to 46 deals, compared with 36 in the same quarter a year ago. And this is a preliminary number for this year’s second quarter, which we expect to rise above 50 transactions. Based on the dollar value of the transactions, the second quarter this year had about $2.5 billion of announced deals, compared with $1.7 billion in the year-ago quarter. And the third quarter got a nice start with Formation Capital’s $400 million acquisition of 36 senior living properties. The main impact of the jump in interest rates is that the sub-6% cap rate deals that we were beginning to hear about just will not happen. With a 10-year Treasury rate above 2.50%, that just does not leave much wiggle room, even for low-cost the REITs.

 

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