Portfolio sales drove seniors housing and care volume in the second quarter, and skilled nursing facilities played a major role in that momentum, according to acquisition data from Irving Levin Associates, Inc.
The second quarter saw 106 publicly announced seniors housing and care acquisitions, up 35% from the year-ago period and 30% higher than the first quarter. Those 106 acquisitions were worth $6.3 billion based on disclosed prices, almost 3.5 times greater than the dollar value of the first quarter, according to the Irving Levin data.
Portfolio sales — defined as transactions with three or more more properties — drove the acquisition volume, with 27 in the second quarter. These accounted for a quarter of all sales. SNFs were included in 23 of those 27 portfolio transactions, and skilled nursing facilities on the whole accounted for 55% of all deals for the quarter.
“People have been writing off the skilled nursing business for years, but the fact that the vast majority of the dollars spent and properties bought were skilled nursing demonstrates that there is still tremendous investor demand for nursing facilities,” Steve Monroe, managing editor of Irving Levin publications The SeniorCare Investor and editor of The Senior Care Acquisition Report, said in a press release announcing the data. “The main reason for the spike in the sale of skilled nursing portfolios was the divestiture by several REITs of many of their skilled nursing assets as they changed their investment goals.”
These have indeed been active times for the publicly traded REITs, with Sabra Health Care REIT (Nasdaq: SBRA) nearing the end of its so-called “exodus” from properties operated by Genesis Healthcare (NYSE: GEN) and Omega Healthcare Investors (NYSE: OHI) overseeing a mass transfer of properties operated by bankrupt provider Orianna Health Systems.
Private operating companies accounted for almost 50% of all 106 acquisitions in the second quarter, compared with 5% by publicly traded operating companies. REITs accounted for just above 12%, while private equity and other non-public investors accounted for 29% of the transactions.
“While they don’t usually do the large, $100 million-plus acquisitions, private operators are hungry for acquisitions while capital availability remains high and it is still relatively cheap,” Monroe noted in the release. “Everyone thinks the PE firms dominate the market, but that is just for the big transactions.”
Written by Maggie Flynn