Senior Housing M&A Dropped 39% Between 4Q20 and 1Q21

The number of publicly announced senior housing transactions fell sharply this year, and the pandemic is the big reason why.

There were just 77 such deals in the first quarter of 2021, according to new acquisition data from Irving Levin Associates. That’s 39% lower than the 127 transactions recorded in the fourth quarter of 2020, and 26% lower than the 104 recorded in the first quarter of 2020.

In the first quarter of 2021, senior housing and care deals totaled almost $1.5 billion, a 43% drop from the previous quarter’s total of $2.6 billion; and a 35% drop from the first quarter of 2020, when senior housing M&A volume totaled nearly $2.3 billion.

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Sales of three or more properties accounted for 18 deals in the first quarter of 2021, a dip compared to the 26 portfolio sales that occurred in the fourth quarter of 2020. But that number is still far greater than the eight portfolio sales recorded in the third quarter of 2020, or the 10 in the second quarter of last year.

Two of the three largest deals in the quarter were in the skilled nursing industry, according to Irving Levin’s data. Those included Larry H. Miller Group of Companies’ acquisition of Advanced Health Care Corporation’s 20 post-acute care facilities in eight states. White Oak Healthcare REIT had the largest seniors housing deal of the quarter when it acquired 16 properties from Healthpeak Properties for $230 million in a joint-venture deal with Discovery Senior Living.

Much of the drop in the first quarter of 2021 has to do with the flow of transactions, which slowed down in the spring and summer of 2020 as many deals were tabled. That created a “significant gap in the transaction pipeline that resulted in few deals ready to close by the first quarter of 2021,” according to Ben Swett, editor of The SeniorCare Investor.

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“There are also ongoing issues in obtaining financing and third-party approvals in a timely manner, and buyers and sellers are still not always seeing eye to eye on pricing,” Swett said in a press release.

Real estate investment trust National Health Investors (NYSE: NHI) is seeing about 60% of normal deal flow, with “odd deals” in the market, CEO Eric Mendelsohn said in a recent SHN+ TALKS appearance. He anticipates that activity will pick up later in the year, particularly for financings.

And smaller deals may be helped along by new flexibilities in Small Business Administration (SBA) lending, Hetal Engineer, director and SBA sales manager at The Bancorp, told Senior Housing News.

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