Senior Housing M&A Reaches $16 Billion, Record Pace to Continue

The market for senior housing mergers and acquisitions continues to shatter records and expectations, leading to what will make 2014 a landmark year for deals.

In the third quarter, the number of announced senior housing and care acquisitions rose 33% from the previous quarter with dollar volume soaring to $9 billion, according to the October 2014 edition of The SeniorCare Investor, an Irving Levin publication. 

Given the activity that has already happened in this year alone, the market is in uncharted territory as it continues to surpass historical norms.


Year-to-date in 2014, the total dollar volume of transactions has amounted to nearly $20 billion, while in 2013, the full-year total was just over $11 billion. These figures, however, include REIT-to-REIT transactions that have, in some cases, involved non-senior housing assets such as medical office buildings (MOBs) and hospitals, among others. 

Eliminating these non-sector assets from the total tally, the dollar value for senior care assets acquired drops to $16 billion in 2014. 

The 80 announced transactions marks the first time the market has ever recorded that many deals in a single quarter, when previously 60 to 65 per quarter seemed to be a peak, said Steve Monroe, editor of The SeniorCare Investor.


Last quarter saw 60 publicly announced senior care M&A transactions, up from 56 reported a year ago during the second quarter of 2013. Even then, that many deals was considered high for one quarter. 

REITs are involved in a sizable portion of the deals, representing 75% of the dollar value in most quarters, according to Monroe. But even still, these larger investors only average 20 transactions per quarter. 

“Contrary to popular belief, the acquisition market, at least based on number of transactions, is still dominated by the strategic buyers,” Monroe writes.

So far this year, more than 50% of the acquisitions are being completed by local and regional providers (40%) combined with publicly-traded or national chains (11%). The rest is made up of private equity firms (12%), not-for-profits (3%) and other not disclosed buyers.

“There is no reason to think this will change much during the fourth quarter,” Monroe writes. “The idea that REITs have such a low cost of capital that they can price everyone out of the market, while true theoretically, just does not hold up when looking at the facts of the actual transactions.”

Now that dollar volume has eclipsed nearly $9 billion in the third quarter alone, the market has already reached $16 billion in senior housing and care transactions.

At this rate, the market is closing in on the 2006 record of over $22 billion, and will “easily pass” the record 225 announced transactions last year, Monroe said. 

“In fact, we may pass that 225 record by Halloween,” he said. “But the ride continues.”

Read more at The SeniorCare Investor.

Written by Jason Oliva