Private Investors Pump Over $7B Into Senior Housing Acquisitions in 2019

In a year where all investor types sought out acquisition opportunities in the senior housing and long-term care space, private equity, especially, flexed its muscle.

The industry racked up $15.7 billion in acquisition deal volume in 2019, according to analysis of data from the National Investment Center for Seniors Housing & Care (NIC). Total deal volume was up 6%, year-over-year.

A deeper look into the numbers, however, shows the influence that private investors are having on the marketplace. Nearly 45% of total deal volume — $7.1 billion — was attributed to private buyers. That marked a 16% jump, year over year.

The most popular acquisitions for private investors were smaller portfolios and single properties.

Shifting supply-and-demand fundamentals are a primary driver in the performance, NIC Senior Principal Bill Kauffman wrote. And this is expected to continue, as construction starts continue to slow and net absorption improves.

“[P]ricing in both seniors housing and nursing care have seen a very positive upswing in 2019, based arguably on the stabilization of fundamentals for both, especially on the occupancy front,” he wrote.

In other notable developments on the M&A front, investor appetite for senior housing paced the overall growth, increasing 19% over 2018 to $11.1 billion. Megadeals such as Ventas’ (NYSE: VTR) $1.8 billion acquisition of Canadian operator Le Groupe Maurice and Welltower’s (NYSE: WELL) $1.8 billion disposition of its Benchmark Senior Living portfolio to KKR pushed senior housing pricing to above $200,000 for the first time, ending the year at $209,600 per unit.

The per-unit price marked a 29.5% increase over 2018, and a 250% jump over the past decade.

Assisted living pricing per unit was even better. The average price for assisted living communities ended 2019 at $248,400 per unit, according to Irving Levin Associates’ Senior Care Acquisition Report. This is a 33% improvement over the previous year and adds to growing speculation that assisted living has reached an inflection point.

Occupancy gains by large operators such as Brookdale Senior Living (NYSE: BKD) and Watermark Retirement Communities, along with declining construction starts in major markets, suggest that investor demand may be on the upswing.