In every investment cycle, there are different factors that impact valuations and transaction volume. In the seniors housing and care acquisition market, there have been periods when public REITs came to dominate acquisition activity, then there were nontraded REITs that took center stage (at least for smaller transactions), and there has been the private equity (PE) market, which has very different investment criteria and time horizons than many of the other buyers.
The two largest acquisitions by private equity firms in the seniors housing and care market occurred about 10 years ago. This was The Carlyle Group’s acquisition of Manor Care for $6.3 billion and The Fortress Group’s purchase of Holiday Retirement Corporation for approximately $6.6 billion, both closing in early 2007. While it makes sense that two of the biggest PE firms would be involved in the two largest senior care acquisitions, we have not seen anything approaching that size in the 10 years since, yet.
What they are lacking in size, the PE firms are certainly making up in volume. In 2016, private equity and private real estate investment firms announced a record 60 separate transactions in the seniors housing and care market, edging out the 54 transactions in 2015. This is more than double the number in both 2013 and 2014. While Carlyle and Fortress have not matched their previous activity, there are others that have filled the void, often with multiple deals. In the September issue of The SeniorCare Investor we will be delving into the private equity investment activity and take a look at who is buying, what they are buying, and whether they will continue to buy.
