Senior Living M&A Sprints Toward a Record 2026 Finish Despite Rate Volatility 

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A sprint. Momentum. Record. Competitive.

These are just some of the ways capital market leaders in senior living are describing the mergers and acquisitions (M&A) investment climate as the end of 2026 draws closer.

The industry is potentially in the midst of another record-setting year for transactions despite rising interest rates and the surge in 10-year U.S. Treasury bond yields.

Investors, lenders and brokers who spoke with Senior Housing News shared a picture of a market still moving faster than they originally predicted at the start of the year. New investors continue to show interest in senior living properties and transaction volume continues to match or outpace last year’s record-setting deal pace.

“The whole year has seemed kind of like a sprint,” said Jason Dopoulos, Co-Manager and Principal at Ikaria Capital Group. “We’re almost at as many M&A transactions as we had last year, which set a record, through October.”

Occupancy rates in primary markets have climbed above 90%, and operators have more room to pass through rental rate increases. Fewer than 16,000 units were under construction nationally as of the second quarter of 2026, according to the National Investment Center for Seniors Housing and Care (NIC). Those two factors are continuing to push senior living M&A higher this year.

Aiding that is the fact that the 80-plus population is projected to grow by roughly 33% through 2030, NIC MAP data shows.

Rising rates, unrelenting deal flow

If there are any storm clouds looming over the strong M&A momentum in senior living, it’s the trajectory of interest rates. At the same time, the 10-year U.S. Treasury yield jumped from 4% in February to roughly 5.1% today, which has forced buyers, sellers and lenders to reevaluate their transaction pipelines.

“The interesting dynamic is that the operating story and the interest-rate story are moving in opposite directions,” said Steve Kennedy, Co-Manager and Principal at Vium Capital. “The fundamental outlook for senior housing may be as compelling as we have seen in a long time, while the cost of financing has become more challenging again. That creates some friction, but it has not eliminated buyers’ appetite for good assets.”

Harrison Street Asset Management Co-Head of North America Transactions Rob Korslin described 2026 as “a year of two parts.” Through the end of August, the transaction environment was “very robust,” with the year on track for what the firm believes will be a strong year for U.S. senior housing transaction activity. The buyer pool was expanding across public and private investment managers, insurance companies, and domestic and foreign pension investors as the overall cost of capital declined. Since late August, however, Treasury yields have moved significantly, creating a “different environment” heading into the fourth quarter.

“We believe the immediate question is whether recent volatility in rates and yields slows activity or widens the bid-ask spread, and whether new development faces headwinds,” Korslin said. “Most projects depend on floating-rate construction loans, so they feel rate increases immediately. Higher financing costs, along with continued materials and labor inflation, may make it more difficult to bring new supply online in the near term.”

Elevated interest rates mean higher debt costs, reduced loan proceeds and increased equity requirements, all conditions that Kennedy noted could cause some to take longer to close as they face scrutiny regarding on leverage and debt service coverage.

“I think that matters, and while I don’t think it stops deals, it could make lenders a little bit more cautious,” Kennedy said.

But the lending environment is still competitive even as these benchmarks have climbed. Deal spreads have tightened significantly, offsetting much of the rate hike impact for borrowers, according to T7 Capital Managing Director Ari Adlerstein.

“Now that rates have gone up and the industry is blossoming, we have a lot of lenders that are aggressive,” Adlerstein said. “They’re taking less spread, probably making less money, just so they can continue to put out dollars. So, it’s gone up 20 to 30 basis points, but the lenders also dropped their spread by 20 to 30 basis points. We’re at a net even.”

Private and smaller senior living owner-operators could feel this impact more than institutional capital providers and their operators, according to SLIB Managing Partner Ryan Saul. Rising interest rates could “present challenges for private and regional owner/operators to be competitive with buyers that have a lower cost of capital.”

As rates increase, the transaction pool might be “restrained” by debt service coverage and “the amount of Housing and Urban Development (HUD) proceeds you can get versus your [property] value,” Dopoulos said.

But despite these growing headwinds, deal activity remains strong. SLIB is on pace for a record transaction volume year, and T7 Capital, which launched in March of 2025, expects to close “several billion” in deals as the calendar turns to 2027.

“2026 is looking to be a big year for us—going into 2027, we already have what I would say is one of the largest pipelines that we’ve had going into a new year,” Adlerstein said.

Strong buyer appetite and an increasingly favorable market for sellers

The transaction landscape in senior living for 2026 has favored sellers, as broker contacts receive a flood of interest regarding available properties. At Ikaria, Dopoulos said it was common to net over a dozen calls per transaction from interested buyers, outpacing the clip reported last year, he added.

“I think the bid-ask spread this year has been pretty liquid in terms of people not being way off from one another,” Dopoulos said.

At the same time, new institutional fund vehicles from Clarion, Silver Wave Capital, Artemis Real Estate Partners and AEW have fueled demand for Class A, stabilized properties.

This alignment between buyers and sellers has been a key feature of 2026 senior living transaction activity, according to Health Wave Partners Chief Investment Officer Phil Kayden.

“The level of M&A activity in 2026 suggests buyer and seller pricing expectations have been mostly aligned for much of the year,” Kayden said.

Alongside stabilized, Class A properties, Saul noted that assisted living continues to make up a large portion of the transaction activity witnessed by SLIB in 2026. Adlerstein noted that independent living cottages, with adjacent assisted living and memory care properties on the selling block, remain highly attractive due to strong occupancy and rising demand.

While competition for primary market, stabilized communities remains strong, investors appear more willing in 2026 to think outside the box and look at secondary or tertiary market acquisition opportunities. This dynamic could be a natural shift in buyer appetite as primary market opportunities become less available.

Going forward, Dopoulos said he believes that capital and interested investors will “slowly pluck their capital into those deals” in secondary and tertiary markets.

“If you still want to be investing in our space—and a lot of our friends do—there’s almost no choice but to try to get comfortable with secondary and tertiary markets,” Adlerstein said.

Cap rates continue to compress in 2026

Capitalization rates continue to decrease for much of 2026. A first-half 2026 investor survey by CBRE found that cap rates declined across senior housing segments paired with stronger investor confidence.

“There is still room for capitalization rate compression in seniors housing compared to other real estate classes,” Saul said, his confidence reinforced by strong demographics, limited construction and steady rent growth.

But heading into 2027, Dopoulos said that he expects cap rates could increase modestly for deals closing in the current interest rate environment as buyers adjust exit cap rates and “bake in higher interest costs” that could potentially affect bids “a little bit,” he said.

“I don’t think it’ll slow anything down that much. I just think it might reprice some things,” Dopoulos said.

Korslin said cap rates compressed by approximately 25 to 50 basis points from the end of 2025 through September 2026, reflecting operating performance that continued to “outperform expectations” and an overall cost of capital that declined for most of the year. It is still too early to determine whether cap rates have reached a floor or will move higher following the recent rise in rates, he added.

“The direction in 2027 will depend largely on where interest rates go from here and whether the recent dislocation has a lasting impact on the cost of capital,” Korslin said.

Development potentially thawing, but still tough

Conditions on senior living development have not improved markedly in 2026. CBRE estimates show that senior housing development costs have increased 23.6% since 2023, and the time it takes to get a project from entitlements to opening is now at 29 months, according to NIC, compared to 19 months in 2019.

“That is why I think we could continue to see a disconnect between M&A and development,” Kennedy said.

But still, developers are dusting off development pipelines. Operators are taking shots on luxury senior living development and in secondary markets, while also looking at ways to reposition or renovate communities to appeal to the next generation of senior living residents.

“Last year, if you asked me to take a development deal on, I would have just flat-out said no. This year we’ve said yes to several,” Adlerstein said. “And so far, so good.”

When asked whether the development pace could be thawing despite these challenges, Dopoulos agreed that capital and its development partners are more willing to entertain conversations around new-build construction than in the past.

“I would say late 2027 at the earliest—maybe even 2028,” he said. “You can’t flip the switch. I know plenty of good companies that have land, they’re getting entitled and they’re just waiting for the math to work.”

Looking ahead to 2027, while this year was dominated by strong momentum, the uncertainty and volatility brought by higher interest rates and higher U.S. Treasury bond yields pose headwinds for the new year.

“We will be watching how interest rates influence asset pricing and seller expectations, particularly whether they create opportunities to acquire high-quality communities at attractive valuations,” Kayden said.