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 Deals for Long Term Care and Assisted Living Properties Remain Strong into 2019

​PricewaterhouseCooper’s (PwC) U.S. Health Services Insight report reveals strong interest in making deals for long term care and assisted living properties in the United States, with deal volume pegging a 7.3 percent increase in the second quarter of 2019 versus the same period of 2018.

In total, PwC said there were 543 health care transactions in the first six months of this year, of which long term care and assisted living (grouped together) made up 41 percent of the volume. Even though the report noted a dearth of megadeals, investors are attracted to long term care and assisted living as the focus in health care shifts solidly to managing costs and population health.

“Since at least 2014, Long Term Care has been the subsector with the most quarterly deals. Q2 2019 continued that trend, with the sub-sector seeing 114 deals,” PwC said.

Other reasons listed for the interest in long term care and assisted living properties is the availability of capital through private equity, the solid outlook for interest rates, and the impact of regulatory and tax policies.

The sole deal above $1 billion in the long term care and assisted living space was the June announcement by health care real estate investment trust Ventas and its $1.8 billion acquisition for 85 percent of Le Groupe Maurice and its Canadian senior housing portfolio.

For the first quarter of 2019 there were 261 deals completed in the overall health services sector, with 281 clocked in the second quarter of this year. PwC said. These results mean that for two years straight the broader sector has seen more than 250 deals per quarter, the report said.

“Quarterly deal volumes have been above 200 for almost five years now, and Q2 2019’s level was well above the 2014-2018 average,” the report said. “Although there were no megadeals [in the second quarter of 2019], non-megadeal-related value growth was up over Q1 2019. Overall trading multiples growth continued for the ninth quarter, but Labs/Imaging/Pharmacy multiples continued to decline. Long-term deal drivers remain largely unchanged.”

The report said a zero-megadeal quarter happens occasionally, “including twice in 2017, and is not usually an indication of future acquisition patterns, especially now, given sustained high levels of private-equity capital available.”

PwC said the most recent megadeal in the health services sector was Centene Corp.’s acquisition of WellCare Health Plans for $17.4 billion in March 2019.

PwC based its analysis on data from Irving Levin Associates, Dealogic Equity Capital Markets Analytics, S&P Capital IQ, and publicly reported deal transactions.

To read the report, visit https://tinyurl.com/y6tjv9ut.

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