“M&A activity dropped in the third quarter of 2022, but the real effects of higher interest rates should lead to a steeper decline in dealmaking in Q4:22"
NEW CANAAN, Conn. (PRWEB) October 12, 2022
The number of publicly announced seniors housing and care acquisitions in the third quarter of 2022 dropped to 133 deals, based on new acquisition data from LevinPro LTC. This represents a 5% decrease from the 140 transactions in the previous quarter but is 20% higher than the 111 deals made public in the third quarter of 2021. Also, the $3.1 billion spent on third-quarter transactions fell by 14% from the previous quarter’s total of $3.6 billion.
“M&A activity dropped in the third quarter of 2022, but the real effects of higher interest rates should lead to a steeper decline in dealmaking in Q4:22,” stated Ben Swett, Editor of The SeniorCare Investor. “Bid-ask spreads are historically wide, and many deals have reportedly died due to higher capital costs and inflation.”
The quarter ended with 37 transactions announced in September, preceded by 55 in August and 41 in July. Overall, 38% of September’s deals were for skilled nursing facilities, but across the entire quarter, skilled nursing’s share of deals was 42%, and 60% of all properties sold in the quarter. So, skilled nursing deal activity picked up in the quarter as buyer interest remained high for the sector.
A total of 369 properties were involved in the third quarter’s 133 publicly announced transactions. There were 30 portfolio deals with at least three properties per deal announced in the third quarter, which is down from the 36 portfolio deals in the previous quarter. Welltower was the most prolific buyer, with five deals covering 11 properties in various joint ventures. The other significant deals of the quarter were in the SNF market: the sale of Stonerise Healthcare for around $650 million, according to our estimates, and Dwyer Workforce Development’s acquisition of 50 skilled nursing facilities in Texas for $590 million.
Private owner/operators accounted for about half of all buyers in Q3, at 49%, followed by private real estate investment firms (11%) and REITs (11%). Private equity firms accounted for 9% of the quarter’s deals across seniors housing and skilled nursing, up from a 5% share in Q2. Not-for-profit organizations made 5% of the quarter’s deals, and the remainder of the buyers were not publicly disclosed.
“Private owner/operators remain the most active acquirers in the seniors housing and care market, as they look to build local and regional scale and efficiencies,” added Swett. “Private capital continues to flood into the skilled nursing sector at very high per-bed values, as well.”
All long-term care M&A deals dating back to 1993 can be accessed on the LevinPro database and can be purchased via a site license. All quarterly results are published in The Health Care M&A Report for all 13 sectors of health care, which is part of LevinPro HC. In addition, annual results of the seniors housing and care acquisition markets were published this year in the 27th Edition of The Senior Care Acquisition Report. For information, or to subscribe, call 800-248-1668. Irving Levin Associates was established in 1948 and has offices in New Canaan, Connecticut, and North Bethesda, Maryland. The company publishes research reports and newsletters, and maintains databases on the healthcare and seniors housing M&A markets.