Assisted living accounted for 42% of the publicly announced senior living and care acquisitions in the second quarter, according to newly released data from LevinPro LTC. The percentage was equal to the first-quarter share.
Skilled nursing properties accounted for 36% of the deals; independent living, 10%; continuing care retirement / life plan communities, 7%; and affordable senior housing, 6%. Only one active adult deal was disclosed in the quarter.
More “realistic pricing” helped boost senior living and nursing home acquisitions in the second quarter, but inflation is making deals more difficult than a year ago, LevinPro LTC said.
The number of publicly announced acquisitions rose to 110 deals in the second quarter, an 11% increase from the 99 transactions disclosed in the first quarter but down 25% from the 147 deals in the first quarter of 2022. Second-quarter transitions also represent the second-lowest quarterly deal total since the first quarter 2021, when 85 deals were announced.
Dollar amounts spent on transactions fell, with the $1.29 billion spent on second-quarter transactions down by 4% from the first quarter ($1.345 billion) and down by 63% from the $3.5 billion spent in the second quarter of 2022.
“Despite spiking capital costs and liquidity issues in the debt markets, buyers and sellers closed more transactions in the second quarter,” Ben Swett of Levin Associates said in a statement. “Sellers compromising or being more realistic on price helped boost transaction activity, but deals are still a lot harder to get done than one year ago.”
The data show the effects of high interest rates on the mergers and acquisitions market, he added.
“The threat of at least one more interest rate hike, let alone two, will likely keep more banks from financing M&A transactions in the senior care market, making deals harder to close and further lowering values for properties,” Swett said. “However, all-cash buyers will still be well positioned to acquire value-add or distressed properties from highly motivated sellers.”
The 23 deals in the quarter that involved three or more properties primarily involved skilled nursing. Four transactions in the quarter involved 10 properties each, down from nine transactions in the first quarter.
Overall, the majority of transactions, 46, occurred in June, followed by April, which had 38, and May, which had 26.
