Seniors Housing And Care M&A Volume Slumped In Q4:2017


The number of publicly announced acquisitions in the seniors housing and care M&A market slumped in the fourth quarter of 2017, with just 70 announced transactions, down 5% from the third quarter (74 acquisitions), according to preliminary data. There was an even larger decline of 25% compared with the year-ago fourth quarter. The dollar volume, however, posted a significant decline from the third to fourth quarter, dropping 28%, from $2.56 billion to $1.85 billion, according to new acquisition data from Irving Levin Associates. The year-over-year decline was an even larger 71%, from $6.47 billion in 2016’s fourth quarter.

“Since the second quarter of 2017, when two transactions brought that quarter’s total to an unusual $9.7 billion, the market has been mostly dominated by smaller acquisitions,” commented Steve Monroe, Managing Editor of The SeniorCare Investor and Editor of The Senior Care Acquisition Report. There were only six transactions with disclosed prices above $100 million. The largest was Mainstreet Health Investment’s acquisition of Care Investment Trust for $425 million. “With the labor, reimbursement and census issues affecting the entire seniors housing and care spectrum, buyers have certainly become more cautious,” continued Monroe.

The lingering debate surrounding tax reform certainly had its impact on the market during the fourth quarter. Several sellers were postponing their closings until 2018 based on the hope that tax reform would pass and their capital gains tax would be lower. Those are usually smaller transactions and not the large corporate acquisitions. Another noticeable trend was that while nearly one-third of all sales in the quarter were of skilled nursing facilities, in the third quarter they represented 46% of the acquisition market. In addition, their pricing began to decline from the peaks in 2016 and the first half of 2017. “Given the well-publicized lease defaults of some skilled nursing chains, some buyers have stepped away temporarily. On the other hand, for other buyers, this atmosphere represents a buying opportunity,” stated Mr. Monroe.

All quarterly results…

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