After several quarters of activity, Chinese investors have been uncharacteristically quiet in the U.S. senior housing space for about a year.
Specifically, there haven’t been any sizable Chinese investments in U.S. senior housing since the first quarter of 2017, according to an analysis from Real Capital Analytics.
The New York City-based provider of capital markets data for commercial real estate analyzed all U.S. senior housing transactions worth $2.5 million or more that were completed between the first quarter of 2014 and April 10, 2018.
In that time, Chinese investors have purchased approximately $1.4 billion worth of U.S. senior housing properties, the data show.
Chinese activity in the U.S. senior housing market began in the second quarter of 2015, when 0.5% of all senior housing acquisitions were made by China-based buyers.
Then, in 2016, Chinese buyers purchased roughly $663.4 million worth of U.S. senior housing assets. In the fourth quarter of that year—the same quarter that Toledo, Ohio-based Welltower Inc. (NYSE: WELL) agreed to sell a 75% stake in a portfolio of Brookdale Senior Living (NYSE: BKD) and Genesis Healthcare to Chinese companies Union Life Insurance and Cindat Capital Management for $930 million—14.7% of all of the U.S. senior housing dollar volume that traded hands went to China-based buyers.
In the first quarter of 2017, meanwhile, roughly 13.4% of the U.S. senior housing that traded hands—or $629 million—was acquired by Chinese buyers. Later in the year, there was chatter that a Chinese firm might acquire industry giant Brookdale, which was in the process of evaluating strategic alternatives, in the light of eroding share value and operational headwinds.
In the following quarters, and through April 10, 2018, Chinese companies failed to invest any more in U.S. senior housing. This may be due to the fact that changing policies in China are potentially constraining foreign real estate investment.
All the while, there remains an “intense appetite” among Chinese capital providers for U.S. senior housing properties, John Stasinos, managing director-healthcare at private equity firm Cindat Capital Management, recently said. Cindat was established to guide and safeguard Chinese capital in foreign investments, as well as to advise and help manage foreign capital with respect to their investments in China.
Chinese interest in U.S. senior housing is fueled in part by the fact that Chinese companies are trying to determine how to best go about building senior housing in their own country as the population there quickly ages. By 2050, there’s anticipated to be approximately 330 million people over 65 in China, according to the United Nations.
Written by Mary Kate Nelson