Last week, we hosted a 90-minute webinar called “Seniors Housing M&A: The Numbers, the Deals and the 2017 Forecast” with panelists Arnold Whitman of Formation Capital, Bill Mulligan of Ziegler and Alan Plush of HealthTrust, and Steve Monroe moderating. The panel discussed our 2016 M&A statistics for the skilled nursing, assisted living and independent living M&A markets (to be published in the 22nd Edition of The Senior Care Acquisition Report this March), which saw new record-high prices for SNFs and ALFs.
But those high prices contradict a growing sense of caution among investors, and lead us to wonder if we have passed the peak. Our listeners to the webinar certainly thought so, responding to the poll question “Have SNF average prices finally peaked?” with 71% believing so. The same reservations are held with the assisted living market, which saw cap rates rise on average for the first time in years (by 80 basis points from 7.7% to 8.5%). So when we asked our listeners what would happen to seniors housing (AL and IL) cap rates in 2017, only 3% believed they would fall. That left 50% thinking they would rise, and 47% seeing no change in cap rates in 2017. So it may be about time to capitalize on the still-high values and still relatively low cap rates, as two-thirds of our listeners would rather be a seller in 2017 than a buyer.
Lastly, the panel shifted the conversation to REITs, and what role they will play in 2017. Among the questions ask, we posed one to the attendees as well: If you were doing a REIT financing today, would you do a traditional sale/leaseback or a RIDEA management back? In response, 63% favored RIDEA, which clearly shows some faith in the fundamentals of the industry. To get the full impact of the 90-minute discussion, you can watch the recording of it anytime.
