The M&A statistics are in for May, and it was a doozy. Only 19 seniors housing and skilled nursing deals were publicly announced during the month, nearly half of which coming from the first quarter earnings reports of several public companies. Without those, we would have barely made it to double digits. You have to go back to July 2017 for such a low monthly total, when 16 sales were disclosed. Back then, however, the month was followed by a strong August (27 deals) and September (35). We’re not as hopeful for such a comeback this time.
Another facet of May’s M&A activity was that nearly all of the deals were either closed in the first quarter or were all-but-completed leading into the COVID-19 crisis. Examining the deals that were actually initiated in the pandemic and closed in May, the month was even slower than it appears. There were just a couple of these deals, that we know of: Twin Light Capital’s acquisition of a seniors housing property in Tampa, Florida for an undisclosed amount and Welltower’s massive sale of two seniors housing portfolios for nearly $800 million (which was announced on June 1 but really closed earlier in May).
Going back to the publicly announced May deals, the largest with a revealed price, according to our database DealSearchOnline, was TL Management and Fortis Business Holding’s acquisition of a 240-bed skilled nursing facility in Brooklyn, New York for $58.8 million, or $245,000 per bed. That’s a very high figure for the skilled nursing sector, but given the real estate value and relatively new vintage (built in 2001, which is new for SNFs, especially in New York City), it makes a little more sense. And the biggest deal in terms of both units and properties was a skilled nursing portfolio sale by Chartwell Retirement Residences to an undisclosed buyer. These four facilities are located in Ontario and total 299 beds.
Moving ahead, M&A volume should stay light for some time, simply because of the difficulty in getting third-party approvals and due diligence done, the lack of debt capital available and the overall economic uncertainty. When deal making does come back, as we have heard rumblings suggesting so, it will still be some time before these transactions reach the finish line. Welltower’s sale, and others, bodes well for the market, showing that deals can still get done.