Senior housing transactions may have reached a fever pitch toward the end of last year as sellers tried to beat the capital gains tax increase, but more acquisitions are continuing to close in 2013 and industry executives say still more opportunities are in the pipeline.
“The deal pipeline is quite robust,” said Jay Flaherty, chairman and CEO of HCP Inc. (NYSE:HCP), during a conference call with analysts discussing fourth quarter earnings. “Relative to a couple years ago, there are more opportunities presenting themselves in the sense of absolute dollar value [and] more in the sense of absolute number of transactions [along with] the sense of different types of transactions.”
HCP, headquartered in Long Beach, Calif., invested $2.6 billion in 2012, including the $1.7 billion acquisition of the Blackstone/Emeritus joint venture portfolio.
Going forward, Flaherty says that by “squeezing more juice” out of HCP’s existing portfolio through various measures, the REIT will be able to remain “completely opportunistic” when it comes to incremental acquisitions.
Chicago-based Ventas, Inc. (NYSE:VRT) completed $2.7 billion of investments in 2012, with chairman and CEO Debra Cafaro characterizing the $1 trillion healthcare and senior housing investment market as “growing, highly fragmented, rapidly changing, and consolidating.”
“I would say that the pipeline is very active and very large as it has been for the past multiple years. We are in a great sector for external growth,” said Cafaro during a fourth quarter earnings call. “And it’s really across the sector: senior housing, medical office and the government reimburse sectors as well as others, and so we feel really good about the forward environment.”
The Chicago-based REIT’s 2013 guidance assumes about $100 million of acquisitions already under contract and about $400 million of debt financing, assuming no additional unannounced acquisitions.
Health Care REIT (NYSE:HCN) invested nearly $5 billion in 2012, primarily into the private pay senior housing and medical office building sectors. Last year’s pipeline was robust, with the REIT adding a $530 million investment to its Belmont Village Senior Living relationship and expanding its relationship with Brookdale Senior Living by $240 million along with another major milestone: acquiring Sunrise Senior Living.
Already, the Toledo, Ohio-based REIT has completed an additional $2.5 billion of acquisitions in 2013 from closing the Sunrise transaction and buying out several joint venture partners’ interests, with an additional $745 million of Sunrise-related closings anticipated in July.
“We will continue to aggressively look at opportunities both in the senior housing and healthcare sectors,” George Chapman, president and CEO, said during the fourth quarter conference call with analysts.
HCN also plans to divest about $500 million worth of its skilled nursing portfolio. Half the disposition of the REIT’s “nonstrategic” skilled nursing assets is scheduled in 2013. When it’s completed, HCN would have only about a $3 billion portfolio, with $2.6 billion of it operated by Genesis three or four operators managing the remainder.