The industry seems to be on the brink of a breakout M&A period, which is an astonishing thing to say when we are already in the midst of a record-breaking period of transaction activity. The promise of an interest rate cut, even a 25-basis point cut, could usher a number of buyers off the sidelines, and if a few lower cap rate deals get announced, then a few more owners of high-quality communities could be tempted off the sidelines too. On our webinar last week covering the mid-year update of our M&A and valuation statistics, our panelists seemed to believe that a number of large deals were looming, which could help break the logjam of mostly small deals closing in the current market. They also believed that values are already on the rise for nearly all types of properties.
A few mega deals could do a lot to lift the mood of the market, especially if they feature more performing properties and not distressed ones. Consistent increases in census and operating margin across the board, although more limited to the Class A communities, have helped with valuations and the mood of the industry overall, too, even though there is still a while to go for the market to fully stabilize and exceed prepandemic metrics. We cover these topics in the September issue of The SeniorCare Investor, which will be published later this week, and we’ll keep an eye on the sentiment of those at NIC later this month.
