Senior Housing M&A Spending Drops Sharply to End 2017

The dollar volume of senior housing and care acquisitions dropped at the end of 2017—and tax reform may be partly to blame.

Approximately $1.85 billion worth of seniors housing and care properties traded hands in the fourth quarter of 2017, according to the most recent statistics from Irving Levin Associations. This is down from the $2.56 billion worth of seniors housing and care transactions that occurred in the third quarter of 2017, and down a whopping 71% from the $6.47 billion worth of transactions that took place in the fourth quarter of 2016.

Meanwhile, the number of publicly announced seniors housing and care transactions totaled 70 in the fourth quarter of 2017, which is slightly less than the previous quarter’s total of 74.


It’s likely that last year’s debate about tax reform affected how seniors housing and care sellers acted during the fourth quarter of 2017, according to Irving Levin. In fact, multiple sellers were delaying their closings until the new year, hoping that tax reform would pass and their capital gains tax would be lower.

Still, some experts, like Matthew Alley, managing director at Glen Ellyn, Illinois-based Senior Living Investment Brokerage, are skeptical that tax reform played a major role.

“I don’t know that the tax reform debate caused a great deal of impact in M&A activity,” Alley told Senior Housing News. “Once it was known that 1031 exchanges would be protected and there wouldn’t be any meaningful healthcare reform, I don’t think there was much thought given to the legislation as it relates to M&A.”


Additionally, smaller acquisitions have reigned supreme in the seniors housing and care market as of late, according to Irving Levin.

This uptick in smaller transactions may result from the increasing difficulty of operating senior housing communities as an independent owner-operator, Alley explained.

“On the other hand, we’ve seen more smaller divestitures by larger owners as they’ve seen an increased need for trimming their portfolios in order to focus on their core markets,” Alley said.

Written by Mary Kate Nelson

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