The number of publicly announced seniors housing and care acquisitions in the third quarter of 2023 fell to 115 deals, based on new acquisition data from LevinPro LTC. This represents a 4% decrease from the 120 transactions disclosed in the second quarter of 2023, but an 18% decline from the 140 deals in Q3:22. Q3:23’s 115 deals surpass Q3:19’s 105 deals, and the average deal total per quarter for 2019 and 2023 (so far) is 115. In addition, the $700 million spent on Q3:23 transactions fell by 46% from the $1.29 billion spent on Q2:23 transactions and by 82% from the $3.87 billion spent in the year-ago third quarter, based on disclosed prices. There has not been a lower quarterly spend recorded in the last ten years.
“With communities selling for lower values because of the high capital costs and quiet bidding environments, many sellers are sitting on the side lines, if they are financially able to,” stated Ben Swett, Managing Editor of The SeniorCare Investor. “Buyers have been less willing or able to make large purchases due to the difficult capital markets, as well.”
The 115 transactions recorded in Q3:23 represents the second-lowest quarterly deal total since the third quarter of 2021, when 111 deals were publicly announced, and shows the impact of high interest rates on the M&A market. There were just under 265 properties involved in Q3:23’s deals for a property-per-deal ratio of 2.3, equal to the ratio from Q2:23. Assisted living deals made up the plurality of Q3:23 deals, accounting for 49%, followed by skilled nursing at 41%. Independent living, CCRCs and affordable senior apartment deals each comprised approximately 3.5% of Q3:23 deals, while there were no publicly disclosed active adult deals.
While Q3:23 saw a healthy transaction level, there were not many large portfolio deals, for the most part. The average transaction size, measured by properties per deal, has steadily fallen since its recent peak of 6.6 properties per deal in Q2:21 and 5.9 in Q3:21. In Q3:23, there were nine portfolio deals involving more than five properties in each, compared with 17 in the year-ago third quarter.
“COVID-19 has many lingering effects in the senior care industry, inflation is elevated, staffing is scarce and expensive, interest rates are historically high and pricing out buyers, cap rates have risen to effectively halt many low-cap rate active adult sales, and values are low enough to keep many potential sellers from selling,” added Swett. “This is all to say, for transaction volume in 2023 to virtually equal that of 2019 is surprising, to say the least.”
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 will be published this year in the 28th 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.
