The first quarter is in the books, and M&A activity, to no one’s surprise, fell in the seniors housing and care market and seems to have settled at a new, lower level. We recorded 95 publicly announced transactions in the first three months of the year, which is down 15% from the 112 deals announced in Q4:22. You don’t have to go too far back in history to find a slower dealmaking quarter; that was Q1:21 when we recorded just 85 transactions. Vaccines were just starting to be distributed back then, and investors were understandably waiting to see the results, which, thankfully, were extremely positive and ushered in the busiest period of M&A activity in history.
That brings up an important point. We are coming off an historic period of dealmaking, with 540 publicly announced transactions in 2022, or an average of 135 deals per quarter. So, let’s just say the drop-off in Q1 could have been worse, and the industry has certainly gone through slower periods in the recent past. But there were under 30 deals each in February and March, so Q2 could be even slower if the market continues at the same pace. And it was not helped by interest rates rising even further at the end of the quarter.
We do hear that deal pipelines are chugging along, and that is because there are still owners that need to sell their mostly struggling communities, for a variety of reasons. They just shouldn’t expect to get top dollar for any of those assets, but hopefully they know that.
