We’re not sure we have ever seen a month like this when it seemed that institutional buyers were racing to see who could announce the biggest deal. First was Welltower’s acquisition of 22 Pathway to Living communities, then came Harrison Street’s $1.2 billion purchase of 24 Oakmont communities, then Atria Senior Living acquired Holiday Retirement and Welltower jumped back in again, acquiring Holiday’s owned portfolio of 86 properties. Next, we had the Griffin American REITs 3 and 4 merging, and finally, at least of this filming, Ventas will pay $2.3 billion to purchase New Senior Investment Group.
It has been a dizzying display of strength from these institutional buyers, and we are curious if some bidding wars will follow throughout 2021 that could help boost prices. Private equity firms have plenty of dry powder ready to deploy, but the REITs are not lacking in liquidity either. And REITs have a lower cost of capital, which may force PE firms to raise their bids, which would lower their returns. Or they can hope that census and cash flow shoot back up to provide a healthy return.
Higher values could also draw more sellers from the sidelines, which means, of course, more M&A. We can only hope.
