Nursing Care M&A Volume Trends Downward in Q2

The total dollar value of nursing care properties that changed hands in the second quarter of 2017 fell slightly from previous quarters, according to preliminary data from the National Investment Center for Seniors Housing & Care (NIC).

In total, $1.4 billion worth of senior care mergers and acquisitions occurred in the second quarter — with senior housing properties accounting for $873 million and nursing care properties representing $573 million. For reference, $613 million worth of nursing care properties were acquired or rolled into other companies in the first quarter of this year.

Overall, total senior care transaction volume in the second quarter of 2017 was 69% less than the first quarter’s volume of $4.6 billion and 45% less than one year ago, when it hit $2.6 billion in the second quarter.

The lower volume was in part due to a large decrease in institutional buyers, NIC Senior Principal Bill Kauffman wrote in a blog post. Last quarter, much of the total volume was driven by two closed acquisitions from private equity firm Blackstone, which acquired 64 senior living properties from from HCP (NYSE: HCP) for $1.125 billion and picked up the Senior Lifestyle portfolio from Welltower (NYSE: HCN) for $747 million.

“One could argue that when large deals close in a given quarter, it will be hard to beat and/or match that trend in the following quarter. And that’s what we had in the second quarter,” Kauffman wrote. “However, let’s also put the quarter in perspective with the trend over the past few years and mention, again, it was relatively weak.”

Another reason for the slowdown is continued weak volume from public buyers, he notes.

Despite the slowdown, volume should pick up by the end of the year as some high profile senior housing deals begin to close.

“The announcement of the merger between Sabra and Care Capital Properties is one deal that could move the needle this year on volume if the properties transact before year-end,” Kauffman told Skilled Nursing News. “Also, another large one that was announced in June but not closed was the Columbia Pacific Advisors and Hawthorn [Retirement] portfolio deal.”

Additionally, Kindred Healthcare in June struck a deal to sell its SNF business for $700 million in cash to a joint venture led by affiliates of BlueMountain Capital Management, a privately held New York-based alternative asset manager.

Written by Tim Regan

Tim Regan

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