REIT Deals for Hospitals Are Picking Up

Most acquisitions in the Hospital sector are made by another hospital or health system. In 2016, 59% of U.S. hospital acquirers were not-for-profit organizations, down from 65% in 2015 but still the majority. Lately, real estate investment trusts (REITs) have taken an interest in the hospital sector, where there seems to be no end to the supply of struggling standalone hospitals. Eight deals were announced by REITs in 2016, involving 19 hospitals, for a approximately $1.5 billion. Many of the target hospitals or systems were owned by private equity firms which wanted out. That was the case in September 2016, when Cerberus Capital Management sold off the real estate assets of its portfolio... Read More »

REIT-backed Hospital Deals Accelerate

Now that hospitals and health systems have realized most of the benefits they expected from the Affordable Care Act, the mergers and acquisitions in the hospital sector have been supplanted by partnerships, clinical collaborations, joint ventures, strategic alliances and affiliations. But there is one group of acquirers still on the prowl: real estate investment trusts (REITs). Their interest and investment in this sector has grown since 2014, when only three REIT-sponsored deals were announced.  Those deals targeted one hospital each, with a total of 94 beds. Combined spending was $1.27 billion. The action picked up in 2015, with six REIT-backed deals announced. The largest was made by... Read More »

Hospital Deals Lag 2015’s Total

Hospital transactions have trickled in during the first three quarters of 2016. To date, 68 mergers or acquisitions have been announced (64 of them for U.S. hospital or health systems), although there have been many more partnerships, strategic alliances and joint ventures in the same period. For our database, those deals don’t count. Last year at this time, 79 deals were recorded, and 2015 ended with a total of 102 transactions (96 of them U.S.-based targets). Given the slowing pace of M&A activity we’ve witnessed since the second quarter, we don’t expect a sudden burst of transactions in the fourth quarter that would reach last year’s level. Spending on the... Read More »