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Closed Transactions Volume Up Significantly in Q3, Pricing Range Bound

Closed transactions volume started off relatively strong in 2017 totaling $4.6 billion in the first quarter, but then experienced a significant decline in the second quarter to only $2.2 billion.  However, the third quarter of 2017 saw a vibrant uptick of dollar volume with a 113% increase from the second quarter.

This blog provides a snapshot of recent activity, and will be followed in November by a more in-depth accounting as more deals are tallied.

Preliminary Dollar Volume

This transactions update for the third quarter is subject to change as smaller deals flow into the database from public records after the close of the quarter. However, the preliminary data shows a large increase in dollar volume in the third quarter.

Seniors housing and care transactions volume in the third quarter registered $4.6 billion. This includes $1.3 billion in seniors housing and $3.3 billion in nursing care. The total volume was up 113%, as stated above, from the previous quarter’s $2.2 billion.  However, it was down slightly from the third quarter of 2016 when volume came in at $4.7 billion.

The first three quarters of 2017 have registered a higher dollar volume than the first 3 quarters of 2016, albeit by only a slight margin.  The first three quarters of last year registered closed volume of $11.1 billion, compared to this year’s $11.5 billion. This year’s figure includes the relatively small dollar volume closed in the second quarter of 2017. However, it is worth mentioning that the number of deals closed in the second quarter was robust. There was simply a lack of larger deals in the second quarter. The third quarter included the large Sabra/Care Capital Properties deal for $2.1 billion.

The rolling four-quarter total seniors housing and care volume was basically flat when compared quarter-over-quarter at approximately to $15 billion.

If we look at the details, we see that the volume increase was really driven by nursing care in the third quarter.  Nursing care volume was up 227% compared to the prior quarter from $1.0 billion to $3.3 billion and seniors housing was up 11% from $1.1 billion to $1.3 billion. Compared to the third quarter 2016, nursing care volume in the third quarter of 2017 was up 57%, and seniors housing was down 52%.

The rolling four-quarter volume in nursing care increased from $5.2 billion to $6.4 billion and seniors housing decreased from $9.7 billion to $8.4 billion.

Price Per Unit/Bed

Pricing has kept pace with robust deal volume. The price per unit/bed for both seniors housing and nursing care continue to be stable.

Seniors housing price per unit decreased slightly by 1.4% this quarter from $173,700 to $171,300.  Compared to a year ago, seniors housing price per unit is up 2.3% from $167,500, and up 193% from the price per unit cyclical low in the second quarter of 2010.

The price per bed for nursing care is basically flat quarter-over-quarter and year-over-year as it has hovered around $94,000 over the past twelve months.



About the Author

Bill Kauffman

Senior Principal Bill Kauffman works with the research team in providing research and analysis in various areas including sales transactions and skilled nursing. He has lead roles in creating new and enhanced products and implementation of new processes. Prior to joining NIC he worked at Shelter Development in investing/acquiring, financing, and asset management for over $1 billion in assets. He also had key roles in the value creation and strategic planning and analysis for over 65 entities. He received his Master of Science in Finance from Loyola College in Maryland. He also holds the Chartered Financial Analyst Designation (CFA).
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