The number of publicly announced seniors housing and care acquisitions rose to 527 in 2022, and skilled nursing powerhouse pacts sent the average amounts soaring. 

An economic slowdown is predicted, however, for the first part of this year, which could lead to a rush of sell-offs, an industry watcher explained.

Two key transactions in particular were major factors for the 2022 bonanza, noted a LevinPro LTC analysis published this week.

The overall number of transactions jumped 17%, up from 450 in 2021. But deal value actually declined to $14 billion from $19.3 billion in 2021.

The two largest disclosed deals in 2022 were:

  • Dwyer Workforce Development’s $590 million acquisition of 50 skilled nursing facilities in Texas in September. At the time, Dwyer called his purchase of Regency Integrated Health Services’ portfolio a “monumental deal.” He told McKnight’s the day-to-day operations of the Regency Portfolio facilities would not change, but the facilities would become homes to the Dwyer Scholar program, which trains low-income workers for careers in healthcare.
  • The sale of 17 Stonerise skilled nursing facilities and ancillaries businesses in an estimated $615 million complex deal involving White Oak Healthcare Partners and CareTrust REIT. The West Virginia organization is now being operated by CommuniCare Health Services.

“Investor interest in skilled nursing facilities stayed strong throughout much of 2022, but high-interest rates and conservative lending terms should lower acquisition activity in the near term,” said Ben Swett, editor of LevinPro’s SeniorCare Investor. “However, if the capital markets dissuade some owners from selling, distressed deals may dominate the market in the first half of 2023.”

That observation echoes the responses of nearly 1,000 nursing home owners, operators and directors in McKnight’s 2023 Outlook Survey. Some 40% said they expect to sell some or all of their nursing home holdings in the coming year.

One M&A expert told McKnight’s that reimbursement woes and inflation were creating a “perfect storm” for a flurry of sales.

LevinPro called 2022 “a tale of two years,” noting that the 10-year Treasury rate’s rise above 3.5% in September ”killed a host of deals and caused plenty of investors and lenders to put their pencils down for the rest of the year.”

Skilled nursing deals represented 41% of all M&A transactions in the organization’s analysis, with the seniors housing sectors of active adult, independent living, assisted living, memory care, CCRCs and affordable age-restricted housing making up the other 59%.

But SNFs accounted for 53% of the individual properties sold in 2022.

“Investor interest in skilled nursing facilities stayed strong throughout much of 2022, but high-interest rates and conservative lending terms should lower acquisition activity in the near term,” Swett said. “However, if the capital markets dissuade some owners from selling, distressed deals may dominate the market in the first half of 2023.”