Seniors Housing and Care M&A Activity Falls to New Low in Q3:2020, According to Data from Irving Levin Associates, Inc.

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Seniors housing and care M&A activity slowed in the third quarter of 2020 to 58 deals amid the COVID-19 pandemic. Based on disclosed prices, the dollar value fell to $1.5 billion, a 74% drop from the third quarter of 2019, according to data from Irving Levin Associates, Inc.

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“Difficulty in obtaining acquisition financing, third-party approvals and property inspections, along with serious questions about how the time it will take for occupancy and operations to recover has caused many buyers to either delay or hit the pause button on dealmaking right now.”

The number of publicly announced seniors housing and care acquisitions in the third quarter of 2020 fell to a new recent low, with 58 deals announced, based on new acquisition data from Irving Levin Associates. This represents a 3% decline from the 60 transactions in the previous quarter but a 44% drop from the 104 deals made public in the third quarter of 2019. However, the $1.48 billion spent on third-quarter transactions surpassed the previous quarter’s total of $1.36 billion by 9%, based on publicly disclosed prices. Compared with the third quarter of 2019, which saw $5.74 billion spent, dollar volume was 74% lower.

“The pandemic continues to stymie dealmaking in the seniors housing and care sector,” stated Ben Swett, Editor of The SeniorCare Investor. “Difficulty in obtaining acquisition financing, third-party approvals and property inspections, along with serious questions about how the time it will take for occupancy and operations to recover has caused many buyers to either delay or hit the pause button on dealmaking right now.”

Private senior care providers usually make up the plurality of buyers, but in the third quarter of 2020, they accounted for 63% of the deals. Not-for-profit buyers were the next most prolific group with 11% of deals, followed by private equity (9%), real estate investors (9%) and REITs (4%). Private investor O&M Investments was the only acquirer in multiple transactions this quarter, with two. The largest deal of the quarter, and likely the entire year, was Welltower’s $702 million sale of a seniors housing portfolio in the western United States. A joint venture between AEW Capital Management and Merrill Gardens Senior Living emerged as the buyer, after a previous attempt by an undisclosed purchaser was terminated at the onset of the pandemic.

Similar to previous quarters, skilled nursing deals represented a minority in third-quarter M&A, in terms of both transactions (41%) and properties (44%). “Skilled nursing facilities bore the brunt of the pandemic, especially in the early months, and many owners are waiting for operations to stabilize and to see what happens with federal funding relief before considering a sale,” added Swett. Seniors housing deals made up the balance of the quarter’s transaction volume, with assisted living accounting for 34% of deals, followed by age-restricted communities (12%), independent living (7%) and CCRCs (5%).

All long-term care M&A deals dating back to 1993 can be accessed on the HealthCareMandA.com Deal 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 the HealthCareMandA.com. In addition, annual results of the seniors housing and care acquisition markets were published this year in the 25th Edition of The Senior Care Acquisition Report. The comprehensive report has 400 pages of transaction details and valuation statistics in a two-volume set, separated out by seniors housing and skilled nursing. For information, or to order the reports, call 800-248-1668. Irving Levin Associates was established in 1948 and has headquarters in New Canaan, Connecticut. The company publishes research reports and newsletters, and maintains databases on the healthcare and seniors housing M&A markets.

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