NIC: Skilled Nursing Transaction Volume Plummets in 2017

Nursing care transactions started 2017 substantially below their levels at the same point in 2016, despite overall senior housing industry gains.

According to new data from the National Investment Center, nursing transactions totaled about $500 million during the first quarter of this year, or 77% less than the volume in the first quarter of 2016. That’s also a decline of 54% from the last quarter of 2016, when nursing care operators saw $1.2 billion in transactions.

That 77% year-to-year number is especially striking given that, as NIC senior principal Bill Kaufman points out, some fall-off in volume between the final quarter of one year the first quarter of the next is to be expected, as brokers and owners clear out their active deals by the end of the year.

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In addition, nursing care volume over the last four quarters totaled $4.9 billion, a drop of $1.9 billion from the previous four-quarter period.

Those numbers represent a stark contrast from the overall senior housing and care numbers, which rose from $3.8 billion in the first quarter of 2016 to $4.6 billion this year, entirely on the backs of senior housing assets — including several large portfolio deals.

“Not only did we see portfolio deals increase overall in the first quarter, from 25 to 29 closed deals to be exact, but we also saw large portfolio transactions close in the quarter,” Bill Kauffman wrote.

Kauffman notes that while the total number of senior housing and care transactions declined from 151 to 118 between the fourth quarter of 2016 and the first quarter of 2017, two $500-million-and-up deals helped to drive growth on a dollar basis.

“However, keep in mind that even with deal count down, this was the 14th consecutive quarter with at least 115 deals closing, which tells us that the brokers are still staying quite busy,” Kauffman wrote.

A significant chunk of the volume boost came from public REITs selling off assets to institutional buyers, Kauffman wrote, with single-property transactions dominating: NIC reported that most deals involved sales of properties for less than $10 million or between $10 and $50 million.

Written by Alex Spanko