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M&A Activity Expected to Continue in Seniors Housing, Survey Finds

October 19, 2018, 07:00 AM

Capital One’s annual survey of seniors housing and long-term care executives has found that industry leaders are maintaining their optimistic outlook for M&A activity for the upcoming year. Ninety-two percent of executives foresee M&A activity maintaining or exceeding the current pace over the next 12 months, with 37 percent of all respondents predicting an uptick in activity.

Capital One’s survey of 147 industry professionals also provided insight on how seniors housing executives plan to expand their businesses in the year ahead. When asked to name the growth strategy that presents the most opportunity moving forward, 37 percent cited the acquisition of existing properties as their top choice, which was consistent with the results from 2017. Repositioning older properties captured 25 percent of the tally, down from 30 percent last year, whereas new development is expected to grow with 24 percent of respondents indicating this as their chief strategy, up from 19 percent in 2017.

 “The outlook for seniors housing is strong, with M&A activity expected to continue into 2018,” said Chris Taylor, Managing Director at Capital One Healthcare. “While many trends are dependent on the specific region or sub-market, there’s an overall optimism that continues to attract new investors to the industry.”

With a continued focus on M&A, survey respondents noted that real estate term loans will be the primary driver of financing. Thirty-four percent of respondents named this as the most important form of financing for their organizations for the year ahead. Highlighting growing interest in new development, construction loans were cited by 28 percent of respondents as their principal financing need.

“The seniors housing market is showing strong signs of growth,” said Jim Seymour, Senior Managing Director, Capital One Healthcare. “Our team is well prepared to help our clients seize these opportunities through our wide variety of financial solutions.”

 Additional survey findings include:

When asked to name the financial challenges that are top of mind for the industry, executives overwhelmingly signaled that labor cost pressure was their chief concern with 48 percent of respondents stating so. Supply and demand imbalances placed second, cited by 39 percent of executives. 

Geographically, executives continued to express their interest in the Southeastern and West Coast markets, with 28 and 19 percent, respectively, citing these areas as the two that offer the most opportunity in the year ahead. 

Executives continue to keep their eyes on the skilled nursing market, as well. Opinion on investor interest in the market over the next 12 months was divided, with 29 percent predicting increased interest and 32 percent foreseeing a decrease in interest.



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