Senior housing market may heat up
WASHINGTON – Gauging by last year’s activity, mergers and acquisitions in the senior housing market should heat up in 2011.
Oxford Finance, which specializes in lending to healthcare providers, has seen a surge of late in capital transactions with long-term care providers, who are aggressively expanding and building new facilities.
“As capital began flowing back into the market in 2010, senior housing has experienced a surge in M&A activity,” said Tracy S. Maziek, director of business development for Oxford Finance. “This trend is driving the need for additional capital, both equity and debt, which is being used primarily to support the growth of long-term care facilities.”
Oxford is seeing a demand for debt from small- to mid-sized operators as well as larger portfolios, with financings ranging from less than $5 million to more than $100 million, he said.
There is a heightened focus on an expected increase in demand for long-term care facilities with the anticipation of baby boomers entering the long-term care system, Oxford officials said. This demand is expected to be double current facility levels within a decade.
“We’re in touch with buyers on a day-to-day basis and we’re noting two things: Their interest is picking up in transactions, but the constant complaint we’re hearing from the buyers is really that there’s a lack of available product for sale that’s meeting their investment criteria,” said Matthew Whitlock, senior vice president of Los Angeles-based CB Richard Ellis, a global real estate services company, in an interview with The SeniorCare Investor.
“So I would say that the market is – we are getting indications from the investment community that the market is picking up, but we haven’t seen enough transactions to really support that,” he said.
Over the last growth period in senior housing the real estate company saw many strategic partnerships between private equity firms and operating platforms, but Whitlock predicts that real estate investment trusts (REITs) will be the big buyers for long-term care in 2011. They simply have the capital.
CB Richard Ellis has also seen expansion of smaller regional operators in 2010.
