Finally, seniors housing and care transactions are picking up speed after a six-month slowdown.
With just over two months to go in what has been the most unusual year I have ever experienced, it seems like the senior care M&A market is finally picking up.
Not only was the $702 million Welltower sale completed with one of the most aggressive cap rates I have ever seen, with or without a pandemic, but smaller ones are getting done as well. And not all of these are postponed deals from last March.
I think all of us are just a little bit tired of the inertia of the past six months, and everyone wants business to be back to at least 75% of normal. The reality is that there is plenty of equity to be invested, and lenders are also somewhat flush with cash. And we know demand is strong.
The problem is that no one knows where values truly are. There is a lag between what is transacting today and where values will settle, and no one really wants to be caught on the wrong side of the trend.
And the weird thing is that average prices paid may not drop as much as “values” have, because buyers are more willing to close on the higher quality properties today, and pay up for them. The lower quality ones will suffer the most. Let me know what you think?
I guess it’s too late to win the Nobel Prize in economics this year but I have a theory that the more golf courses that are built, the lower the initiation fees and the dues are at existing clubs. Likewise for assisted living facilities, ski areas (sort of). I think I’ll call it supply and demand. When my philanthropic friends and I built a hospice house we missed supply and demand by a mile. There’s a steady stream of old people needing our array of services but the demographics and epidemiology are immutable.