Investors and owners closed fewer deals in the first quarter of this year as interest rates and other economic conditions continue to make senior living transactions harder.
In the first quarter of 2023, the number of publicly announced mergers and acquisitions fell to just 98, representing a 13% drop from the 112 deals announced in the fourth quarter of last year and a 32% decline from the 144 deals announced in the same quarter of 2022, according to data published by LevinPro LTC.
That makes the first quarter the slowest deal-making quarter since Q1 of 2021 when just 85 deals were made public.
“As lending issues plague the senior care industry and some major loan defaults are potentially around the corner, deal activity and values will take a hit,” Ben Swett, editor of Senior Care Investor said in a press release about the latest M&A totals. “However, we will likely see all-cash buyers make opportunistic acquisitions throughout the year.”
The monthly trends appear to show that the number of deals is steadily declining this year. In January, 40 senior living mergers and acquisitions were announced. That number dropped to 28 in February and 30 in March, falling below an average of one transaction per day.
After publicly announced deals racked up $1.97 billion in spent money for the fourth quarter of 2022, the first quarter of this year saw total spend drop to $1.35 billion – a mark significantly below the $5 billion spent in the same period last year.
Still, the makeup of the recently closed deals remains similar to that recorded in the previous quarter. Nine of the disclosed transactions in Q1 consisted of at least 10 properties, while 21 deals included three or more properties.
Assisted living accounted for the majority of senior living deals closed at 42%, followed by active adult at 9% and, independent living at 7%. Affordable senior housing made up 6% of the deals, while CCRCs made up 4%. Skilled nursing accounted for the remaining 32% of closed deals this year.
The data reflect what many in senior living see as a difficult market for those looking to grow through acquisitions.
National Investment Center for Seniors Housing & Care Chief Economist recently called the acquisition market “stalled,” as “no one is willing to be the first one out of the box [in 2023] to put their properties out there to see how much the market has changed,” she told Senior Housing News earlier this month.
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