Sizable transactions from real estate investment trusts (REITs) helped propel senior housing and care merger and acquisition activity higher in the second quarter of 2021 than the first quarter.
The number of publicly announced senior housing and care acquisitions in the second quarter of 2021 rose to 109 deals, representing a 31% gain from the 83 deals made public in the first quarter of 2021 and a 79% gain over the second quarter of 2020, according to new data from Irving Levin Associates.
The deals in the second quarter 2021 totaled about $6.74 billion, a 138% gain from the previous quarter’s deal total of $2.83 billion.
A handful of large deals announced in June were the driving force behind the quarterly uptick in transaction value: Atria Senior Living’s acquisition of Holiday Retirement for an undisclosed price in conjunction with Welltower (NYSE: WELL) buying 86 properties for nearly $1.6B; and Ventas’ (NYSE: VTR) $2.3B acquisition of New Senior Investment Group (NYSE: SNR).
Thanks to the two REIT deals, about 61% of the properties that changed hands during the quarter were independent living communities despite independent living making up just 9% of the total deals. Assisted living deals accounted for about 36% of the quarter’s activity, while CCRCs made up about 9% of transactions, active adult and affordable senior apartments accounted for 6%, and skilled nursing made up 33% of the deals.
Twenty-nine of the total number of deals in the second quarter of 2021 involved at least three properties, while 19 transactions included between three to nine properties and 10 involved 10 or more properties.
“The market seemed to turn a corner in June, when the three largest deals in two years were announced one after another in a three-week span,” said Ben Swett, editor of The SeniorCare Investor, which operates under the Irving Levin Associates umbrella. “But it was also the propensity of small and medium-sized deals disclosed in the quarter that better indicates the market’s current good health.”
Meanwhile, investors appear to be favoring lower-acuity communities, such as active adult, as cap rates fall for those property types, according to a recently released H1 2021 U.S. Seniors Housing & Care Investor Survey from CBRE.
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