60 Seconds With Swett: Everybody’s Talking About Brookdale

60 Seconds With Swett: Everybody’s Talking About Brookdale

This week, we can’t not talk about Brookdale Senior Living reportedly exploring a sale of the company and engaging with advisers to find potential buyers, and the rumors are flying. Will Healthpeak Properties, now under the helm of Welltower alumnus Scott Brinker, reenter the seniors housing market in the big way by buying Brookdale? Or will Ventas, with its size and its warrants to buy 16.3 million shares at about $3 per share, be the buyer? Or will a PE firm take the company private and continue the long road to recovery without an eye towards quarterly earnings reports. There is also the question of whether Brookdale CEO Cindy Baier will stay on in her role after more than four years as... Read More »

60 Seconds With Swett: Q3 Ends on a Down Note

We recorded 133 publicly announced seniors housing and care transactions in the third quarter, for an average of over 44 deals a month. That is the fourth-highest quarterly deal total ever recorded by LevinPro LTC, but is lower than the each of the last three quarters. What is very interesting though is that the rolling-12-month deal total has never been higher. In the period from October 1st, 2021 to September 30th, 2022, we have recorded 553 publicly announced transactions, down just one deal from the previous 12-month span ending August 31st, 2022, and that total has crept up steadily throughout the year. It’s also a preliminary total that is bound to rise. To put it in perspective, the... Read More »

60 Seconds With Swett: SNF Values Have Hit Their Peak

We have hit a valuation peak for skilled nursing facilities, and we do not feel like we are going out on a limb in saying it. That is because soaring interest rates have made acquiring facilities at extremely high prices much more expensive. The realities of a difficult operating environment concerning labor and inflation must also be top of mind for lenders, which are probing deals very deliberately, as they should. Regulatory issues have also made deals tougher, and longer, to close, and delays can be especially costly as the Fed keeps increasing rates. That being said, we have also heard of more than several cases of renegotiations, final bids coming in lower than the initial bids, and... Read More »

60 Seconds with Swett: More Distress is Coming

It was great to see so many people at NIC, and we were happy to hear of deals still getting done and of some healthy transaction pipelines as well. As we have been saying, M&A activity will slow as a result of the rate increases and other economic factors, but many deals will still be made. That is because there should be plenty of willing sellers in the next few quarters (or longer). As soon as many of these owner/operators felt they were somewhat in the clear from the pandemic and even from staffing agency use, inflation hits and their margin recovery looked less likely. And after more than two years of heavy stress, plenty will say “enough is enough” and decide to sell. What is... Read More »

60 Seconds With Swett: A Bad Inflation Report and Its Effects on M&A

The Labor Department’s latest inflation report was certainly not the news that everyone was hoping for, and that many were expecting. According to the report, the core consumer price index, which excludes energy and food, rose 6.3% in August from a year earlier, up from 5.9% in both June and July. That was the real shock of the report, and the Dow plummeted by more than 1,100 points at one point on Tuesday. Crucially, this is the last report released before the Fed meets on September 20 and 21, which only increases the chances of another 75-basis point increase to the federal funds rate. M&A has already been affected by the rise of interest rates this year, so another jump (along with... Read More »

60 Seconds With Swett: Judging the Mood of Next Week’s NIC Conference

Next week is NIC’s Fall Conference in Washington, D.C., and we are curious to see just how inflation, rising interest rates and general economic uncertainty will affect the mood of the many dealmakers in attendance. We are on track to break a record for total transactions announced in a year, and only an especially slow fourth quarter would prevent that from happening. Given how much capital is out there for higher yielding assets (compared to multifamily that is), and the fact that rates are still historically low for now, we think we’ll break that record. There will just be a little more conservatism in most buyer’s bids and from their lending partners, which is not a bad thing. The... Read More »