Do buyer’s see a bottom? That is one explanation for the incredibly busy start to May, which has seen 21 acquisitions announced, so far, according to our M&A database DealSearchOnline. And that does not include deals that may bubble to the surface in the coming weeks. So, with seniors housing occupancy still relatively low and the labor supply and cost problem not diminishing, why are so many increasing their interests in the senior care market?
Those problems may well be the answer, if buyers believe we are at an operational bottom for the industry. It seems a number of big companies are betting that’s the case, with a number of them announcing large acquisitions and initiatives that suggest they are now on the offensive. HCP Inc. immediately comes to mind as jumping back into the M&A market in a big way, acquiring nine senior living properties owned by Discovery Senior Living for $445 million plus three more assisted living/memory care communities from Oakmont Senior Living for $113 million.
CareTrust REIT and The Ensign Group have been busy as usual too, with The Ensign Group also spinning off its skilled nursing business into The Pennant Group, adding another buyer to the SNF pool. Other firms like Cascade Capital Group, Northbridge Companies and CA Senior Living have announced large portfolio acquisitions in the senior living space.
In addition, not only has May been busy, but it follows 40 acquisitions announced in April, and over 150 in the first four months of 2019. This Spring surge is no fluke, and it may help set a record in 2019.