Senior Housing And Care Deal Value Drops In Q3

Deals involving health care assets topped 250 transactions for the fifth straight quarter, but deal volume and value both saw double digit year-to-year declines, according to a new report from PricewaterhouseCoopers (NYSE: PWC).

Long-term care paced the activity, with 102 deals — 39% of total volume. However, deal value for long-term care transactions was down 35.3% compared to the same period last year.

London-based professional services firm PwC analyzed data from Irving Levin Associates platforms, as well as Dealogic Equity Capital Markets Analytics, S&P Capital IQ and publicly available transaction information.

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PwC
Health services deal volume and value from Q4 2016 to Q3 2018.

The PwC report listed 261 completed transactions across the health care space in Q3. Total deal value was $15.9 billion. In addition to five consecutive quarters with 250 or more deals, the industry has recorded over 200 deals per quarter since Q1 2014. However, the Q3 numbers slightly lower than the average of the preceding seven quarters (264), and a 0.4% increase, year-to-year.

Third quarter deal value, meanwhile, plummeted 35.8% compared to Q2, was down 10.1% year-to-year and was at its lowest number since Q1 2017. The report does note that one contributing factor to the lower deal value is some transactions not disclosing financial terms.

Industry experts at last week’s National Investment Center for Seniors Housing & Care (NIC) fall conference expressed concern about peaking valuations and the likelihood of interest rate hikes over the next 12 months.

Megadeals are driving activity

The PwC report indicates investors are looking for scale in their acquisition opportunities, and singled out Arcapita’s reported $100 million acquisition of two Chicago-area CCRCs, and Ventas’ announced $194 million acquisition of Brookdale Battery Park in New York City. There were four long-term care deals valued at $100 million or greater.

Written by Chuck Sudo

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