NREI: For Senior Housing Investment, 2012 is the Year of the Small Deal

Most agree that 2011 was the Year of the REIT, marked by blockbuster, million and billion dollar deals that changed the landscape of the senior housing and care industry. This year, 2012, hasn’t been quite so dramatic, and experts are calling it the Year of the Small Deal, writes the National Real Estate Investor.

The first two quarters of 2011 saw a staggering $15.9 billion worth of deals closed, according the National Investment Center for the Seniors Housing and Care Industry (NIC). In the first half of this year, those numbers rang in at a more modest $2.1 billion.

“I don’t think we’ll be within shooting distance from the 2011 numbers, but that was an exceptional moment,” says Bob Kramer, NIC president. Full year 2011 investment sales totaled $27.4 billion, Kramer says. “If we achieve 50 percent of that it would be a very, very active year.”


That doesn’t mean investors are sitting on their hands. Kramer notes the current 2012 tally does not include last month’s Genesis HealthCare Corp.’s $275 million acquisition of rival Sun Healthcare. For the most part, however, Kramer says the current market offers smaller opportunities.

“They’re good opportunities, but they may be eight or 10 or 13 properties, not 50 or 100,” he notes.

 Matthew Whitlock, senior vice president and managing director with CBRE senior housing services, says 2012 is different from the most recent past in that there is far less activity in portfolio sales and far more activity by private equity players buying single properties and smaller properties.


“We continue to feel strongly that this acquisition activity will continue until development re-enters the marketplace or until we see interest rates for long term debt rise,” he notes.

REITs are still “on a tear,” according to the managing director for seniors housing and healthcare at Lee & Associates, says the article. With most of the larger portfolios having already been acquired, they’re now looking toward smaller pools of properties—and they’re still buying what’s available as long as it fits into their investment strategy. 

However, while acquisitions are “robust” for assisted living, independent living, memory care, and skilled nursing facilities, the same isn’t true for continuing care retirement communities because weak housing values are still preventing many seniors from being able to afford upfront entrance fees, according to the managing director of CBRE’s senior housing services.

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Written by Alyssa Gerace

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