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The stage is set for 2025 to be a record-breaking year for senior living merger and acquisition activity.
As of the end of September, the industry reached “new heights” with reaching a record breaking 733 publicly announced deals over a 12-month span, according to Irving Levin data. For comparison, the industry had a total of 717 deals at this point in 2024 and 518 in 2023.
However, total M&A dollar volume isn’t keeping pace with the number of deals going on. Industry data showed transaction dollar volume at $11.9 billion between June 2024 and 2025, which is well below the $30 billion transaction volume the senior living industry notched in 2014.
Only one deal in 2025 – Welltower’s roughly $3.2 billion acquisition of the 38-community portfolio of Amica Senior Lifestyles in March – was big enough to register as among the industry’s top 10-largest.
Helping to create the flurry of deals this year are improving conditions for M&A coupled with the fact that the financial math for development still doesn’t pencil out. A recent interest rate cut, a looming demographic wave and bolstered investor confidence are signaling a more active year ahead for senior living M&A. All the while, the gap between what buyers and sellers of senior living communities want out of a deal is shrinking.
In this members-only SHN+ Update, I analyze the number of small deals taking place, alongside current cap rate trends, and offer the following takeaways:
- How tailwinds are driving a more active senior living investment year ahead
- Why investors and REITs are opting for smaller transactions
- Recent smaller deals making up the M&A landscape in 2025
Surging M&A as investor sentiment shifts
Senior living investors are putting their money where their collective mouths are in 2025 and looking ahead to 2026. As they do so, they are picking up properties with stabilized cash flows, good rent growth and a location supported by demographics and low new supply.
A combination of factors, including a recent interest rate cut, are pushing senior living investors to seek new deals and take existing ones across the finish line. According to a fall 2025 senior housing outlook from Walker & Dunlop, a host of factors are currently motivating sellers to make more deals, including cap rate compression, a general need to rebalance and prune portfolios, management of debt maturities, a lack of new development, shifts to Medicaid.
Senior living investors expect more cap rate compression ahead as operators grow rent and revenue, according to a recent survey from BBG Real Estate Services.
Another boon to senior living M&A is new HUD lending “express lane,” which is a “game-changer,” due to the way it can shorten traditionally long HUD financing timeframes, according to Walker & Dunlop EVP and Group Head of FHA Finance Ken Buchanan.
“With the express lane, these loans are processed and approved by HUD within 3 to 5 days compared to a historical average of 122 days,” he told Senior Housing News earlier in October.
The return of lending from government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac is another boon for senior living M&A, according to Walker & Dunlop.
As a result of all these trends, senior living investors have shifted away from using distress as a primary driver for new deals.
“Sellers are predominantly exercising choice – maximizing proceeds, re-aligning strategies, and leveraging improved debt options – rather than exiting under pressure,” the Walker & Dunlop report’s authors wrote. “Buyers are paying for quality, operator strength, and location, with disciplined underwriting and a premium on speed and certainty of close.”
REITs get selective
In 2025 thus far, multiple REITs have sought to acquire communities to complement their growing SHOP segments, including Welltower (NYSE: WELL), Ventas (NYSE: VTR), NHI (NYSE: NHI) and LTC Properties (NYSE: LTC).
Buyers, REITs included, are now more selective in what they acquire than they were in the past, according to the Walker & Dunlop report. As they grow they are sometimes breaking apart and combining communities into new or existing portfolios to drive better results with the help of regional senior living operators.
For example, senior living REIT LTC Properties (NYSE: LTC) last month acquired five communities operated by Lifespark for $195 million, representing only a portion of the operator’s 46-property portfolio. The communities that changed hands carry an average occupancy rate of 97%, and LTC management believes they will help bolster results for its burgeoning senior housing operating portfolio (SHOP).
Although its portfolio did not change hands with the move, REIT Diversified Healthcare Trust (NYSE: DHC) took that strategy when it sliced a 116-community portfolio formerly managed under the Five Star Senior Living brand into smaller more manageable chunks with seven operators.
I also think it’s important to note that some of the senior living industry’s larger deals in recent years haven’t panned out as well as buyers had hoped. For instance, Welltower (NYSE: WELL) CEO Shankh Mitra said during the company’s most recent earnings call that its 2021 acquisition of a portfolio of 89 Holiday Retirement communities valued at $1.58 billion has turned into “our biggest disappointment over the past decade.” Mitra believes the company’s leaders erred in the portfolio’s initial execution plan and deal structuring, and the deal’s “failure” so far illustrates the challenge ahead for acquirers of big portfolios
Looking ahead, Walker & Dunlop sees “modest additional cap-rate compression for core assets where bid depth remains 10 to 15 offers.” Furthermore, greater liquidity “should support refinancings and acquisitions, lowering execution risk and widening buyer pools.”
It’s clear that senior living industry tailwinds are pushing more investors to transact. It’s also important to note that development remains tough with the current state of construction costs and underwriting. Until that dynamic changes, it’s logical to assume that investors with money to spend will choose to deploy it more into M&A opportunities.
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