NEW CANAAN, CT – July 20, 2020 – The number of publicly announced seniors housing and care acquisitions in the second quarter of 2020 dropped below 60 transactions for the first time since the second quarter of 2013, with 59 deals, based on new acquisition data from Irving Levin Associates’ M&A database, Deal Search Online. This represents a 40% decline from the 99 transactions announced in the first quarter of 2020 and a 50% decrease from the 117 deals in second quarter of 2019. Buyers also committed fewer dollars to Q2 deals, spending a total of $1.35 billion on seniors housing and care deals, a 50% drop from the $2.7 billion in the first quarter of 2020. “Given the economic uncertainty, difficulty in securing acquisition debt and inability to actually visit senior care properties during the pandemic, it is no surprise that M&A activity was so low this quarter,” stated Ben Swett, Editor of The SeniorCare Investor. “Because of the way dealmaking also petered out from the 22 deals in April to 20 in May and then to just 17 transactions in June, the third quarter may slow even more.”
Two deals comprised about 60% of the quarter’s total dollar volume: Welltower’s sale of two seniors housing portfolios for approximately $500 million and $300 million, respectively. The first transaction included seven senior living communities scattered throughout Florida and operated by Discovery Senior Living, while the other featured six Midwest senior living communities operated by Senior Star. Kayne Anderson Real Estate Advisors bought the Florida portfolio and announced one other deal during the quarter. Tryko Partners, Fairstead and Omega Healthcare Investors also each announced two acquisitions. As per usual, private senior care providers made up the majority of buyers, counting for nearly 50% of all Q2 acquisitions. REITs and real estate investment firms made 25% of the deals, and 14% were announced by private equity firms. Those ratios were similar to the previous quarter.
Skilled nursing deals made up a larger ratio of the transaction volume compared with the first quarter of 2020 but still represented a minority with 44%. Seniors housing, which comprises independent living, assisted living, memory care, CCRC and age-restricted properties, took 56% of the quarter’s deal volume. Looking at the properties that sold in those transactions, the ratio was 50-50 between skilled nursing and seniors housing. “Nationally, skilled nursing facilities have so far seen more dramatic declines in census, due to the postponement of elective surgeries and the fact that they care for a frailer and more medically complex patient population,” continued Swett. “But seniors housing communities have also suffered from declining occupancy, and questions about how long-term demand for these property types will change following COVID-19 still remain.”
All long-term care M&A deals dating back to 1993 can be accessed on the Deal Search Online database and can be purchased via a site license. 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, annual results of the seniors housing and care acquisition markets were published this year in the 25th Edition of The Senior Care Acquisition Report. The comprehensive report has 400 pages of transaction details and valuation statistics in a two-volume set, separated out by seniors housing and skilled nursing. For information, or to order the reports, call 800-248-1668. Irving Levin Associates was established in 1948 and has headquarters in New Canaan, Connecticut. The company publishes research reports and newsletters, and maintains databases on the healthcare and seniors housing M&A markets.