NIC: Senior Housing M&A Volume at All-Time High

Transaction volume within the senior housing sector is at an all-time high, and recently released research findings indicate that commercial real estate professionals don’t expect it to slow any time soon.

At the end of the second quarter of 2015, approximately $17 billion in senior living transaction volume was recorded over the past 12 months throughout the United States, representing just more than 8% of the total market cap, according to data presented by the National Investment Center for Seniors Housing and Care (NIC) during a recent webinar. This amount is the highest the industry has seen since the first quarter of 2011.

“The increasing transparency in seniors housing has definitely translated to not only more interest in the sector, but has resulted in more capital markets activity in the sector, as now we’re at record volumes in terms of sales volume transactions and pricing remains near record highs,” NIC managing director and director of research and analysts Chuck Harry said in the webinar.


A survey conducted by NIC and the National Real Estate Investor finds that commercial real estate professionals believe transaction volumes will either remain stable or grow over the next year. Of 182 surveyed from the organizations’ respective databases, 40% predict the volume of property sales will remain the same, while 53% expect even more transactions.


Source: NREI


As the $17 billion figure suggests, the transactions closed thus far in 2015 have hefty price tags. Among the 10 largest transactions to date are the sale of ARC Healthcare to Ventas Inc. (NYSE:VTR) for $1.18 billion in January; Extendicare REIT to NorthStar Healthcare for $876.5 million in June; and Fortress to NorthStar Realty for $875.6 million in May, according to NIC.

The makeup of the top 10 biggest deals so far in 2015 range from as few as 679 properties to up to 15,000 properties, Harry said.

Recent acquisitions may support investors’ assumption that more transactions are likely, as does speculation within the industry that some major players could be involved in merger and acquisition actionIn a report released earlier this week, Goldman Sachs named Brookdale Senior Living (NYSE: BKD) as one of six top acquisition targets in the health care sector. And Mizuho analyst Richard Anderson recently floated the idea that major REIT consolidation could be in the offing.

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Meanwhile, ROC Seniors Housing Fund Manager LLC acquired more than $1 billion worth of senior housing and medical properties in August alone, and the company shows no signs of slowing down after having raised $737 million for a new investment fund targeted at more transactions and developments.

In May, Senior Housing Properties Trust (NYSE: SNH) closed a $763 million portfolio acquisition, and post-acute giant HealthSouth Corp. (NYSE: HLS) continues to expand thanks to a $730 million acquisition in June.

Written by Kourtney Liepelt

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