Dealmaking in the long-term care sector showed a significant fall of 33% to 98 transactions in the first quarter compared to a year ago when 144 deals were reported.
Skilled nursing made up 32% of the deals completed in the first quarter, according to data released Thursday by Norwalk, Conn.-based Irving Levin Associates. Assisted living deals accounted for the majority, or 42%, of the transactions.
Of the deals completed, nine transactions had more than 10 properties in each, and 21 total deals with at least three properties, which were split about evenly between skilled nursing and seniors housing transactions.
Also, the amount spent on deals fell to $1.35 billion in Q1, registering a whopping decline of 73% from $5.07 billion spent in the first quarter a year ago and a drop of 31% from $1.97 billion spent in Q4.
On a quarterly basis, transaction numbers dropped 13% in the first quarter of 2023, down from 112 deals in the fourth quarter of 2022.
Dealmaking in the sector was dampened by high interest rates and capital costs as well as liquidity issues in the debt markets, the firm noted.
The Irving Levin data comes about a month after the failure of Silicon Valley Bank, which disrupted the banking system and raised concerns about further tightening of debt markets. The Federal Reserve subsequently raised the benchmark interest rate by 25 basis points in March, which could “potentially pour more cold water on transactions,” Stifel analyst Tao Qiu told SNN at the time.
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