The first quarter of this year proved busy for senior housing and care buyers, though real estate investment trusts (REITs) continued to stay largely on the sidelines.
Seventy-seven publicly announced senior housing and care acquisitions took place in the first quarter of 2018, which is up from the 70 acquisitions that took place in the fourth quarter of 2017 and the 76 that took place in the first quarter of 2017, according to new data from Irving Levin Associates.
The dollar value of the transactions that occurred in the first quarter of this year, meanwhile, was roughly $1.74 billion. That’s up 20% from the first quarter of 2017, but down from the $1.85 billion worth of assets that traded hands in the fourth quarter of 2017.
Of the 181 properties that traded hands in the first quarter of 2018, 85 were senior housing communities and 96 were skilled nursing facilities. Private operators comprised 43% of the buyers, and private equity firms and additional private real estate buyers made up 34%.
REITs, meanwhile, acted as buyers in just 17% of the first-quarter 2018 deals. As a group, REITs have noticeably slowed down on the acquisition front. In fact, at the moment, they’re acting more as sellers than buyers.
These numbers are only the latest evidence that REITs have shifted roles in the M&A market from where they were a few years ago.
Formerly REITs were like “hungry, hungry hippos,” Ross Sanders, senior director within the national seniors housing group at capital markets transactions services firm HFF, recently said. During this time after the Great Recession and up until 2017, many REITs embarked on a buying spree, purchasing a variety of properties that they then held on to for a while.
“Then last year and this year, they’re trying to figure out, ‘What did I buy during the binge?’” Ross explained. As a result, many REITs are currently divesting non-core senior housing and care assets, he noted.
Written by Mary Kate Nelson