Despite a strong December, when we recorded 30 long-term care transactions, the fourth quarter of 2017 was slow by all recent standards. These are preliminary numbers and may be revised upward in the coming weeks, but with just 69 announced acquisitions, Q4:17 was the least active quarter in terms of number of transactions since Q2:14, when we recorded just 63 deal announcements. Compared to the previous years’ fourth quarters, 2017 fell short significantly, down from the 93 deals recorded in Q4:16 and from the 108 deals recorded in Q4:15 (the all-time high for a quarter). There were few high-priced deals, as well, with the largest of the quarter (Mainstreet’s $425 million acquisition of Care Investment Trust) only ranking as the eighth-largest transaction of 2017, in terms of price. It may be said that we are now on the other side of the market peak, punctuated by the abysmal performance of most public senior care companies’ share prices in 2017.
However, we have heard many buyers are putting off acquisitions until 2018, following the GOP tax reform bill’s passage. Welltower alone kicked off the New Year with its announced $368 million acquisition of four Sunrise Senior Living-operated CCRCs from Senior Housing Properties Trust. Up until now, average per-unit and per-bed prices have also remained near the recent peaks, particularly among skilled nursing sales. We will have to wait to see where the 2017 averages settle when we publish the 23rd Edition of The Senior Care Acquisition Report later in the first quarter. But while activity seemed to wane in 2017, tax reform, abundant liquidity and a few announced mega deals could make for a different 2018.
