Non-profit Senior Living M&A, Affiliations Still at Record Levels

Workforce challenges, leadership turnover and expense pressures are still posing headwinds for non-profit senior living providers, with “record-level” activity by organizations seeking potential affiliations or asset sales.

That’s according to the 2024 Mid-Year Not-For-Profit Senior Living M&A Update report by Chicago-based investment bank Ziegler. The level of M&A and affiliations among senior living nonprofits has been continually high through the Covid-19 pandemic.

By the second quarter of this year, Ziegler tracked 677 nonprofit senior living consolidation transactions compared to 637 transactions reported last year. That is up further still from 2022’s 575 transactions.

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“We will continue to see these proactive not-for-profit organizations scan the market for potential partners in search of like-minded providers whereby an affiliation can be a win-win for both,” Ziegler Vice President of Senior Living Research Cathy Owen wrote.

About one-quarter of communities involved in a transaction are transferred to another nonprofit senior living provider, with life plan communities the “most likely to remain” a nonprofit status. Closures of nonprofit senior living businesses are also on the rise post-2020, according to Ziegler.

Senior living nonprofits closed at a rate of 24.4% annually post-2020 compared to 16.5% closure rate prior to the pandemic, Ziegler reported, down slightly from last year’s 16.9% closure rate.

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The senior living industry has seen multiple nonprofit providers join forces in recent years, including nonprofit Diakon joining Lutheran Senior Services earlier this year. The move was described by LSS leadership with the belief that “scale is going to matter for the success of non-profit senior living moving forward.” 
Some areas of the nonprofit senior living sector remain under pressure, including life plan communities or operators with large exposures to skilled nursing facilities, as nonprofit life plan communities still have a “deteriorating” outlook, according to the latest Fitch Ratings report.

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