Execs See Steady Pace of Senior Housing M&A Ahead

Leaders in both senior living and skilled nursing are confident that the pace of mergers and acquisitions will hold steady or accelerate in the year ahead.

More than 150 senior housing and health care company executives weighed in on the 12-month outlook for the industries as part of a new survey from Capital One, a financial holding company headquartered in McLean, Virginia.

An overwhelming majority (89%) of the surveyed executives predicted that the pace of skilled nursing and senior housing mergers and acquisitions will “maintain or exceed the current pace over the next year.” Additionally, 43% of the executives anticipated a definite increase in M&A activity.


Because the survey didn’t ask about senior housing and skilled nursing separately, it wasn’t clear if the executives felt more optimistic about one sector or the other, however.

The acquisition of existing facilities was cited by 37% of executives as the strategy “that would present the greatest amount of opportunity in the year ahead,” according to the survey. Another 30% of executives said repositioning of older properties was a top concern, and only 19% said new development presented the best opportunity.

Business leaders also said markets in the Southeast (26%) and on the West Coast (22%) offered the most opportunity for M&A activity in the year ahead.


Some senior housing owners, such as Sabra Health Care REIT (Nasdaq: SBRA), have made headlines recently with big-ticket mergers and acquisitions.

In the second quarter of 2017, $1.4 billion worth of senior care properties changed hands, $873 million of which was made up of senior housing properties and $573 million of which was made up of nursing care properties, according to data from the National Investment Center for Seniors Housing & Care (NIC).

But the skilled nursing industry seems to be a little quieter, at least on the M&A side.

Overall transaction velocity in the skilled nursing sector has declined 17% over the past year, according to a recent report from Marcus & Millichap, a Calabasas, Calif.-based commercial real estate brokerage and research firm. The same report found a 34% bump in assisted living sales activity, a trend that could continue into the future.

Nursing care inventory has fallen for the fifth straight year, with 330 beds taken out of the nation’s stock in the second quarter of 2017, according to the Marcus & Millichap report. Currently, there are only about 5,000 SNF beds under development, which is dramatically down from a high water mark of more than 11,100 beds in 2012.

Written by Tim Regan

Companies featured in this article: